What is Payment Facilitation as a Service or PayFac-as-a-Service? | Ikajo International


What is Payment Facilitation as a Service or PayFac-as-a-Service?

What is Payment Facilitation as a Service or PayFac-as-a-Service?
Table of Contents

    Digital payments have become such an integral part of our daily lives that it is challenging to imagine what our world would be like without them. Yet, just a decade ago, their prevalence was less widespread. Online stores can now start accepting payments for goods and services in a matter of days. It is possible with the help of financial technology providers, specifically payment facilitators. Moreover, the evolution of payment facilitation goes beyond simplifying payment acceptance, now being offered as PayFac as a Service for payment providers and marketplaces.

    In this article, we will explore what is PayFac-as-a-Service, who it is for, and how it benefits Payment Service Providers (PSPs) and merchants worldwide.

    What is a payment facilitator (PayFac)?

    Payment facilitator, abbreviated as PayFac, is a type of financial service provider that simplifies payment acceptance for businesses. When PayFacs first emerged, their primary role was to consolidate multiple sub-merchants under their own master merchant account. Traditionally, the purpose of PayFacs was to relieve merchants of the complexity of setting up their own merchant accounts independently, allowing smaller businesses or organizations to start accepting payments more easily.

    In response to the demand for sophisticated payment software and advanced technologies, payment facilitators have evolved, expanding their range of services. Currently, payment facilitators offer an array of services that differ among providers. These may encompass payment gateway, intelligent routing and cascading, fraud prevention, reporting and analytics, payment monitoring, subscription billing, payment integrations through an open Application Programming Interface (API), and more offerings.

    What is PayFac-as-a-Service?

    Payfac as a Service is a turn-key solution that an external company provides a merchant or payment provider on a subscription or usage basis. Simply put, the vendor of Payfac-as-a-Service provides businesses with a platform or infrastructure allowing them to act as payment facilitators without building the entire infrastructure themselves. 

    This model can be particularly beneficial for startups aiming to enter the digital payments sector with a ready-to-use solution. Also, it can be helpful to established software platforms seeking service expansion, marketplaces looking for advanced payment infrastructure without the need to build one themselves, or other businesses that want to facilitate payments for their users.

    How Does PayFac as a Service Work?

    Payment Facilitation as a Service provides businesses with the pre-configured infrastructure and tools needed to act as PayFacs. Here’s how it operates:

    1. A merchant or payment provider signs a partnership agreement with the preferred vendor
    2. Next, the client integrates PayFac’s infrastructure using the provided Application Programming Interface (API) or integration tools. The vendor refines the system during this phase and conducts initial compliance checks.
    3. When the client and vendor are all set, the client undergoes system training to familiarize its team with PayFac’s functionality. They explore the tools, dashboard, and payment facilitation process provided by the vendor.
    4. Being familiar with the system, the client starts sub-merchant onboarding. At this stage, they ensure that each sub-merchant complies with the necessary regulations and security standards.
    5. With the teams fully trained, it is time to perform system testing to ensure smooth functionality and seamless operations. If the client seeks system upgrades tailored to their requirements, the vendor customizes the system accordingly.
    6. Finally, with implemented and maintained robust security measures, the fully equipped system transitions to live mode, proceeding to ongoing operations.

    Payfac-as-a-service vs. becoming a payfac

    If you want to become a payment facilitator, there are two options for it. The first one is to create a PayFac yourself, building the infrastructure from the ground up with your own investment of funds, time, and effort. The second one is to opt for the PayFac as a Service model, where you leverage a ready-made solution. Let’s compare these two together!

    If you establish a PayFac on your own, you gain the flexibility to design a system tailored to your unique preferences and needs. This approach provides complete control over the system‘s design, features, and functionality. Yet, the autonomy of independent development comes at a price. Depending on factors such as system complexity, customization requirements, compliance standards, security measures, and chosen technologies, development expenses can range from 200,000$ for a low-end PayFac to over 1,000,000$ for a high-end one. Plus, you should also consider the yearly price of its ongoing maintenance. Furthermore, you need to invest sufficient time in developing a payment facilitator system. It typically takes from 6 months to a year to create a Minimum Viable Product (MVP).

    Opting for an established PayFac-as-a-Service offers a swift entry into the payment facilitation industry without starting from scratch. This approach saves time and money on software development and maintenance. At the same time, you won’t compromise on the system’s quality, as PayFac as a Service is provided by experienced vendors with professional expertise in FinTech software development. They will manage all the technical aspects for you, allowing you to focus on core business operations instead. Additionally, the vendor can help you acquire the required licenses and security certifications, providing guidance throughout the process. Yet, you may sacrifice some level of system customization compared to an independently built PayFac. Moreover, it’s crucial to carefully select the vendor, as this choice will condition your system’s features, integrations, and other aspects.

    Benefits of PayFac-as-a-Service

    Payment Facilitation as a Service offers multiple benefits to merchants and payment solution providers. They include:

    Cost efficiency

    PayFac as a Service is commonly delivered through a Software-as-a-Service model. It involves a structured subscription payment that is considerably lower than the initial development cost. Subscription costs vary depending on factors such as the number of integrations, transaction volume, and additional development needs. Typically, the initial setup fee starts at a few thousand dollars.

    Quick time-to-market

    Using PayFac-as-a-Service allows businesses to enter the digital payments market in a matter of weeks. In turn, it allows generating revenue from the very first month of operation. This strategic approach provides them with a competitive advantage in the market.

    System management 

    The responsibility for managing the technical aspects of the payment facilitation system rests with the vendor.  It includes infrastructure, security measures, integrations with banks, payment providers, and processors, error and bug fixing, system upgrades, and ongoing maintenance,

    Regulatory assistance

    As part of their legal and secure operation within the financial and payments industry, payment facilitators must acquire licenses and certifications required by their region of operation, including Payment Card Industry Data Security Standards (PCI DSS), Network Compliance, and others. PayFac as a Service’s vendors may guide businesses in obtaining licenses and security certifications that ensure compliance with industry standards.

    Reduced compliance burden

    Payment Facilitation as a Service alleviates the compliance burden on businesses. Vendors take on responsibility for compliance management of their system, ensuring it adheres to all relevant legal and regulatory standards.

    Risk mitigation

    Given that PayFacs handle the most sensitive information of customers – their payment data – they must keep it secure and detect unauthorized transactions. PayFac as a Service offers advanced fraud prevention measures. They include customizable in-house anti-fraud modules and third-party risk-scoring systems that empower customers to prevent fraudulent transactions efficiently.

    High-end technologies

    As the digital payments market is highly competitive, providers of PayFac as a Service furnish systems with advanced payment technologies, enabling their clients to maintain competitiveness. In this way, a system with innovative ready-to-use technologies is available for customers at a low cost compared with the expense of developing it themselves.

    How can PayFac as a service be useful for your business?

    PayFac-as-a-Service can be advantageous for various businesses, including marketplaces, emerging payment service providers, and established FinTechs. Here’s how your business can benefit from Payment Facilitation as a Service:

    Leverage a ready-to-use system 

    For aspiring entrepreneurs venturing into the digital payments sector, PayFac as a Service is an opportunity to quickly launch their business with a robust and cutting-edge payment system. It is a good fit for startup PSPs with limited resources or those unwilling to endure a year-long development process. Instead, they can perform operations on a system with advanced technologies crafted by industry experts.

    Expand operations scope 

    Established financial technology companies can use PayFac-as-a-Service to broaden their operational reach. This is particularly beneficial for FinTechs specializing in areas beyond payment facilitation. For instance, ISOs, MSPs, embedded finance providers, cryptocurrency payment platforms, and others. White-label PayFac as a Service enables rapid integration of payment facilitation features without extensive development efforts. Additionally, it allows FinTechs to customize the payment facilitation system to align seamlessly with their unique offerings.

    Open a new revenue stream

    Merchants from various industries can generate income from payment processing services with PayFac as a Service. By offering seamless payment facilitation within their platforms, they can attract more transactions. In turn, they will generate revenue from transaction fees. This additional revenue stream can reinforce their existing business model. Furthermore, it can enhance merchants’ overall financial performance.

    Choosing a payfac-as-a-service provider

    Choosing a vendor for Payment Facilitation as a Service is a critical decision. It requires careful consideration based on your business needs. Here are the key points to pay attention to:

    Industry experience

    Before partnering with a vendor, ensure they have extensive experience in payment software development. It will be a plus if they are renowned within the digital payments industry. Vendors with established proficiency in the field have a deep understanding of the complexities, compliance requirements, and industry’s best practices.

    Compliance and security

    Make sure that the vendor is compliant with industry regulations and standards. Look into their payment fraud prevention measures, including data encryption, anti-fraud filters, and adherence to PCI DSS.


    Consider your business’s potential growth and evolving transaction volume when choosing PayFac as a Service provider. The system they offer should be able to handle increasing transaction volumes and adapt to your company’s changing needs.


    Evaluate the customization opportunities the provider offers. The greater the flexibility of the payment solution regarding features and payment integrations, the more versatile it becomes in catering to your specific business requirements.

    Customer support

    Your satisfaction with PayFac as a Service will be significantly influenced by interactions with the vendor’s support team. Diligent customer support is available to address any queries and provide guidance on optimizing the system for your business.

    Among the best options to consider is Ikajo, a renowned white-label payment solution provider with years of operations in the field that offers an advanced PayFac as a Service incorporating all the above-listed features and beyond. This solution empowers businesses to fully utilize PayFac’s advanced functionality that provides a customizable payment environment for each client to meet the specific needs of their business. Schedule a Free Demo with Ikajo’s experts for a first-hand look at the system and its capabilities.


    In conclusion, PayFac as a Service emerges as a transformative solution, allowing businesses to swiftly enter the payment facilitation space with zero development. The flexibility, scalability, and comprehensive support provided by reputable vendors, such as Ikajo, make PayFac as a Service an integral asset for businesses aiming to open new revenue streams or expand their offerings.

    Thank You For Order
    Thank you!

    Thanks for filling that out. We really appreciate you giving us a moment of your time today. Your ticket on its way to your email.