Payment Facilitator (PayFac)

What a payment facilitator contracts for

The Visa Rules define a payment facilitator as an entity that contracts with an acquirer to deposit transactions, receive settlement from, or contract with an acquirer on behalf of a sponsored merchant — an entity that contracts with the facilitator and, under that contract, is able to accept a card to sell goods or services. Two agreements sit behind it: a payment facilitator agreement with the acquirer, and a separate contract with each sponsored merchant, which that agreement must require. This differs from a directly contracted merchant account signed with the merchant acquirer itself, though the two can coexist once the threshold below is crossed; either way the sponsored merchant is treated as a merchant of the facilitator’s acquirer.

Source: Visa, “Visa Core Rules and Visa Product and Service Rules” (Glossary, “Payment Facilitator” and “Sponsored Merchant”, edition 18 April 2026); Visa, “Visa Core Rules and Visa Product and Service Rules” (§5.3.1.1 “Required Content of Payment Facilitator Agreement or Digital Wallet Agreement”, edition 18 April 2026); Visa, “Visa Core Rules and Visa Product and Service Rules” (§5.3.1.2 “Acquirer Liability for Payment Facilitators and Sponsored Merchants”, edition 18 April 2026), accessed 2026-09-04.

Facilitator or merchant? Run the classification test

Visa classifies by function, not by the label a platform gives itself. An entity that deposits a transaction, receives settlement from and contracts with an acquirer or facilitator is a merchant or sponsored merchant only if all three tests below apply; otherwise it is a digital wallet operator, marketplace, payment facilitator or ramp provider, and Visa reserves the right to make that determination.

Source: Visa, “Visa Core Rules and Visa Product and Service Rules” (§5.3.2.2 “Qualification as a Marketplace, Merchant, Payment Facilitator, Sponsored Merchant, Digital Wallet Operator, or Ramp Provider”, edition 18 April 2026), accessed 2026-09-04.

Where liability lands

The acquirer’s agreement must state that the facilitator is liable for the acts, omissions, cardholder disputes and customer-service issues caused by its sponsored merchants, and is financially liable for each transaction processed on their behalf, including any disputed transaction or credit. Neither may transfer that liability by asking cardholders to waive their dispute rights. The acquirer is in turn liable for the acts and omissions of both, including related legal costs and settlement. Design chargeback handling around that chain.

Source: Visa, “Visa Core Rules and Visa Product and Service Rules” (§5.3.1.1 “Required Content of Payment Facilitator Agreement or Digital Wallet Agreement”, edition 18 April 2026); Visa, “Visa Core Rules and Visa Product and Service Rules” (§5.3.1.2 “Acquirer Liability for Payment Facilitators and Sponsored Merchants”, edition 18 April 2026), accessed 2026-09-04.

Identifiers in the authorization and clearing records

The acquirer obtains a unique payment facilitator identifier from Visa; the facilitator determines and assigns its own unique identifier to each sponsored merchant. The rules split them by message type: an authorization record must contain both identifiers, while a clearing record contains only the payment facilitator identifier. That asymmetry is why sponsored-merchant reporting differs from a directly contracted merchant identification number (MID).

Source: Visa, “Visa Core Rules and Visa Product and Service Rules” (§1.5.1.10 “Payment Facilitator Identifier Assignment”, edition 18 April 2026); Visa, “Visa Core Rules and Visa Product and Service Rules” (§5.3.1.3 “Acquirer Requirements for Contracting with Payment Facilitators”, edition 18 April 2026), accessed 2026-09-04.

Money follows the same chain: a facilitator that receives payment from the acquirer on behalf of a sponsored merchant must pay or credit that merchant’s account promptly after transaction deposit, less credits, discounts, disputes and other agreed fees. See settlement for the funds movement.

Source: Visa, “Visa Core Rules and Visa Product and Service Rules” (§1.5.6.2 “Acquirer Payments to Card Acceptors”, edition 18 April 2026), accessed 2026-09-04.

The USD 1 million graduation threshold

An acquirer must enter a direct merchant agreement with a sponsored merchant that exceeds USD 1 million in annual transaction volume — before any transactions are processed if the merchant is new to the facilitator, or within two years of exceeding that figure for an existing one. The sponsored merchant then holds a direct agreement with the acquirer while the facilitator may continue to provide payment services, including settlement. Documented exceptions exist — a two-year relationship with the same acquirer plus regular reporting and oversight, and specific merchant category codes. None of this applies in the LAC Region (Brazil, Chile), and Visa reserves the right to amend these terms.

Source: Visa, “Visa Core Rules and Visa Product and Service Rules” (§5.3.1.4 “Acquirer, Payment Facilitator, and Sponsored Merchant Agreement Terms”, edition 18 April 2026), accessed 2026-09-04.

Upon Visa request the acquirer must report, for each sponsored merchant:

• Sponsored merchant name as it appears in the merchant name field
• Sponsored merchant DBA name
• Payment facilitator name
• Monthly transaction count and amount
• Monthly dispute count and amount

Source: Visa, “Visa Core Rules and Visa Product and Service Rules” (§5.3.1.3 “Acquirer Requirements for Contracting with Payment Facilitators”, edition 18 April 2026), accessed 2026-09-04.

Duties that do not transfer, and where providers differ

That agreement must also require the facilitator to ensure its sponsored merchants comply with PCI DSS and the PCI Software Security Framework standards. Outsourcing does not clear the merchant: the PCI Security Standards Council says a merchant that outsources all processing stays responsible for confirming the provider is compliant for the services offered, for written agreements acknowledging provider responsibilities (Requirement 12.8.2), and for monitoring compliance status at least annually (Requirement 12.8.4).

Source: Visa, “Visa Core Rules and Visa Product and Service Rules” (§5.3.1.1 “Required Content of Payment Facilitator Agreement or Digital Wallet Agreement”, edition 18 April 2026); PCI Security Standards Council, “Does PCI DSS apply to merchants who outsource all payment processing operations and never store, process or transmit cardholder data?” (merchant responsibility when processing is outsourced); PCI Security Standards Council, “Document Library” (published PCI DSS and Software Security Framework standards), accessed 2026-09-04.

Platform products sit on these rules and differ. Stripe ties funds flow to the charge type: with direct charges the payment lands in the connected account’s balance and chargebacks reduce it, while for destination charges and separate charges and transfers Stripe debits dispute amounts and fees from the platform account. Adyen states that a user’s legal entity type and operating country determine the verification information a platform must collect. Both are those providers’ own models, not industry rules.

Source: Stripe Documentation, “Charges in a Connect integration” (Stripe’s own platform charge types and funds flow, not an industry rule); Stripe Documentation, “Disputes on Connect platforms” (Stripe’s own dispute-debit behaviour by charge type, not an industry rule); Adyen Docs, “Onboard and verify users” (Adyen’s own platform onboarding and verification model, not an industry rule), accessed 2026-09-04.

Geography is constrained too: a facilitator may contract with a sponsored merchant outside its own country only if the acquirer and sponsored merchant are in the same country and settlement reaches that merchant in the acquirer’s jurisdiction through a permitted account arrangement. This does not apply in the LAC Region (Chile); in the LAC Region (Brazil) a facilitator must not contract with a sponsored merchant outside its own and its acquirer’s country.

Source: Visa, “Visa Core Rules and Visa Product and Service Rules” (§1.5.1.1 “Acquirer Jurisdiction and Restriction of Cross-Border Acquiring”, edition 18 April 2026), accessed 2026-09-04.

Compare Merchant of Record (MoR) for who is contractually the seller.