Platform use cases
Marketplaces, SaaS platforms, and gig apps often adopt PayFac models to control onboarding UX.
Compliance burden
PayFacs must monitor sub-merchant KYC, fraud, and scheme registration requirements.
Sources
FAQ
PayFacs typically hold the merchant agreement and settlement relationship with sub-merchants.
Related terms
Explore related definitions
Chargeback
A chargeback is a forced reversal of a card transaction initiated by the cardholder through their issuer, usually citing fraud, non-delivery, or billing disputes, and debited from the merchant through the acquirer.
Settlement (Card Payments)
Settlement in card payments is the process of transferring cleared transaction funds from acquirers to merchants after authorization and clearing, net of fees, chargebacks, and rolling reserves.
PCI DSS
PCI DSS is the Payment Card Industry Data Security Standard—a set of security controls merchants and service providers must follow when storing, processing, or transmitting cardholder data.
Merchant Acquirer
A merchant acquirer is a licensed institution that underwrites merchants, routes card transactions to card networks, settles funds to merchant accounts, and manages chargeback and compliance obligations.
Payment Orchestration
Payment orchestration is the practice of routing each transaction through the optimal acquirer, method, or gateway path based on rules such as cost, authorization rate, geography, and redundancy requirements.
Payment Gateway
A payment gateway is the technology layer that captures checkout payment details, routes authorization requests to acquirers or processors, and returns approval or decline responses to the merchant application.
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