What is a Payment Facilitator?

As e-commerce continues to grow in popularity, the process of making and accepting payments online becomes increasingly important. Payment facilitators, also known as payment aggregators or payment service providers, have emerged as an important player in this field. In this blog, we will discuss what a payment facilitator is and how it differs from traditional payment processing methods.

Payment facilitators are companies that offer payment processing services to merchants, enabling them to accept credit and debit card payments from their customers. Essentially, payment facilitators act as intermediaries between merchants and payment networks such as Visa, Mastercard, and American Express. By using a payment facilitator, merchants can avoid the complexity of dealing directly with these payment networks, which can involve the lengthy and costly process of setting up a merchant account.

Instead, payment facilitators offer a simplified onboarding process that allows merchants to start accepting payments quickly and easily. This is especially beneficial for small and medium-sized businesses that may not have the resources or technical expertise to set up their own payment processing systems.

Payment facilitators also provide a range of other services beyond payment processing. These can include fraud detection and prevention, chargeback management, and compliance with industry standards such as the Payment Card Industry Data Security Standard (PCI DSS).

One key feature of payment facilitators is their ability to offer sub-merchant accounts to their customers. These accounts allow merchants to accept payments under the payment facilitator’s own merchant account, rather than requiring the merchant to set up their own account with a payment network. This can be particularly useful for businesses that operate in industries that are considered high-risk or that have limited credit history.

Payment facilitators typically charge a fee for their services, which can be a flat fee per transaction or a percentage of the transaction amount. The fees charged by payment facilitators can vary depending on a number of factors, including the volume of transactions processed, the types of payments accepted, and the level of risk associated with the merchant’s business.

It is important to note that payment facilitators are not the same as traditional payment processors. Payment processors typically require merchants to set up their own merchant accounts with payment networks, whereas payment facilitators offer sub-merchant accounts that simplify the onboarding process. Additionally, payment facilitators may offer a wider range of services beyond payment processing, such as fraud detection and prevention.

In conclusion, payment facilitators are an important player in the e-commerce landscape, offering merchants an easy and convenient way to accept payments online. By simplifying the payment processing process and offering additional services such as fraud detection and compliance management, payment facilitators can help merchants focus on their core business while leaving the technical details of payment processing to the experts.