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What are PayFac Companies?

What are PayFac Companies?

The world of finance and technology is ever-evolving, and this has introduced new players in the market. One of the most notable and innovative of these players is Payment Facilitators (PayFac). PayFacs take pride in being a better option to the traditional merchant setup, offering a more effective and hassle-free way of processing payments.

In this article, you will learn more about payment facilitation companies and their role in the payments ecosystem, as well as the benefits that they offer to merchants. Let’s dive in.

So, what are PayFac companies?

PayFac companies, which is short for Payment Facilitators or Payment Facilitation providers, are service providers that offer simplified payment processing services to businesses. They do so by aggregating merchants under a single, well-organized platform. That way, businesses can accept payments at a quicker and easier rate, without having to set up individual merchant accounts.

For individual businesses, it’s more convenient to have a sub-merchant account under the PayFac’s merchant account, since that reduces liability. What’s more, when you choose a better PayFac company with rev share like Tilled, you can also monetize your payments and increase the revenue of your business.

What are the benefits of leveraging PayFac services?

Among the many reasons to team up with a PayFac, here are the most notable:

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1. Streamlined onboarding process

As mentioned before, it’s easier to have a sub-merchant account as opposed to creating a merchant account with a bank. PayFac companies simplify the merchant onboarding process and make it easier so that you can focus more on your business.

They will handle the underwriting and compliance processes for you so that you can start accepting payments immediately. This saves a lot of time for small and medium-sized enterprises (SMEs) that are looking for an easier and faster entry into the market.

2. Risk management and compliance

Managing risks and ensuring compliance are vital inputs to the payment processing ecosystem. PayFac companies employ advanced risk management tools and technologies to catch any fraudulent activities and reduce potential risks associated with such activities.

With centralized risk management, your business will be more compliant, which can protect you from risks such as legal action.

3. Enhanced payment functionality

Payment facilitation providers make it easier for you to have access to a wider range of payment options and functionalities. One of the main reasons for this is that they are able to accept different payment methods such as debit cards, credit cards, Automated Clearing House (ACH), and digital wallets.

Such versatility makes it possible for your business to cater to a diverse client base since customers have different preferences. As such, you will have increased customer satisfaction rates and increased sales.

4. Aggregated payment processing

One of the main reasons why PayFac companies are so efficient at what they do is aggregated payment processing. This type of payment processing refers to pooling together the funds from multiple merchants before settling them into individual accounts.

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Not only is it more efficient, but it also allows for a simpler reconciliation process for businesses. That way, the PayFac won’t have to manage separate settlements after each customer payment for different businesses. Still, each business will be able to track the payments from their customers, for increased transparency.

5. Revenue-sharing capabilities

These days, more and more PayFacs are offering revenue-sharing advantages to their customers. What this means is that you are entitled to a certain percentage of the profit from the processing fees of payments to your business.

Keep in mind, however, that different PayFacs have different arrangements, some of which have tricky clauses. For this reason, it will be crucial that you spend enough time researching so that you can select your provider carefully.

Handle payments better with Tilled

Now that you know what PayFac companies are, it’s time to enjoy the benefits that they bring to businesses.

When you work with Tilled, you can expect a powerful and more convenient way of handling the payments to your business. And since Tilled also gives you the chance to increase your business’s margins with shared revenue, you have a lot to gain.

So take action and engage Tilled today for easier payments.



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