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Guide to a Payment Facilitator Business

Guide To a Payment Facilitator Business

With online shopping becoming the norm nowadays, the demand for online payment is also rising, with both businesses and customers now need more ways to perform secure and accessible online transactions. 

This phenomenon opens up new opportunities for entrepreneurs and businesses to connect buyers and sellers by becoming payment facilitators. 

In this guide, we’ll explore what a payment facilitator is, how you can become one, and why getting the help of a payment consultant is the best way to start a payment facilitator business. 

What is a Payment Facilitator

A payment facilitator essentially facilitates a business to receive online payment. 

To really understand what a payment facilitator is and the benefit of the payment facilitator model, we should first understand the traditional process that a merchant must go through before it can start receiving online payment. 

Traditional Merchant Onboarding

While the actual process can be much more complicated, in general, the merchant (for example, an eCommerce store) must first apply for a merchant account in order to get a merchant ID or MID to the credit card publisher. The MID is a unique number used to identify your business to start receiving credit card payments. 

On the other hand, you’ll also need to sign a direct agreement with a sponsoring bank, after this bank has surveyed your business and deemed it eligible to be sponsored. 

As you might have guessed, this process often involves lengthy paperwork that can take weeks and even months to complete. The merchant is required to meet the compliance requirements established by the sponsoring bank and credit card network, and getting approved can be very difficult. 

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The Payment Facilitator Model

The payment facilitator model, on the other hand, eliminates the lengthy paperwork process.

The payment facilitator has undergone the underwriting process and is now qualified as a master merchant account provider. Thus, it can now take other online merchants under this master merchant account as a sub-merchant, allowing these merchants to start receiving online payments right away. 

The sub-merchant is not needed to fill out paperwork or provide detailed information, typically they are only needed to provide key information to the payment facilitator. 

Benefits of Payment Facilitator Model

  1. Faster Onboarding Process

The payment facilitator, as the master account, is the one who undergoes the lengthy paperwork process so that the sub-merchants can bypass this underwriting process. 

Typically the sub-merchant is only required to provide essential information (name, address, phone number, etc. ), and the information is then evaluated by automated underwriting software operated by the payment facilitator. 

As a result of this automated process, approval can happen in just a matter of minutes rather than the onboarding time frame in a traditional model that can last weeks. 

  1. Versatility for Everyone

The payment facilitator owns the direct agreement with the sponsoring bank, not the sub-merchants. Thus, the sub-merchants aren’t directly locked into a contract with the bank’s terms, but only into the payment facilitator’s agreement. 

This provides the payment facilitator more versatility with managing the sub-merchants, and vice versa the sub-merchants aren’t locked into the right rules of the banks. 

  1. The simple and fair pricing structure

The sub-merchants can get benefit from a simple and transparent flat-rate pricing structure offered by the payment facilitator. On the other hand, the payment facilitator has the flexibility to adjust its fees depending on the competition, market condition, and other factors. This is opposed to the traditional model where there are often hidden fees and surprise rate changes. 

  1. Fund control
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In a payment facilitator model, the payment facilitator can independently control how much money is funded to each specific sub-merchant and can control other details like diverting portions of the fund to other bank accounts when needed. 

Getting Help from Payment Processing Consultants

Electronic payment processing is obviously a heavily regulated industry, and to become a payment facilitator you’ll need to stay in compliance with various federal and state regulations. 

Being approved as a payment facilitator can be a lengthy and challenging process and you might go through various detailed examinations. This is where getting the help of payments processing consultants at RPY Innovations can significantly help in getting your business approved as a payment facilitator with close to a 100% approval rate. 

Also, by being a payment facilitator, you are assuming liability for all financial risks for your sub-merchants. You are essentially exposing yourself at risk for negligent and even malicious merchants. 

Setting up policies and rules for underwriting your sub-merchants is very important to protect your payment facilitator business and to ensure it stays profitable. Below are some important details you should consider when managing your payment facilitator business:

  • How to perform due diligence for each (potential) sub-merchant
  • How to efficiently and safely handle chargebacks
  • Policies about when anomalous transactions need to be manually reviewed based on different factors/thresholds
  • When and how to perform manual reviews
  • How to manage ownership changes or change of business practices of your sub-merchants
  • Criteria for KYB (Know Your Business) and KYC (Kow Your Customer)
  • How to review potentially high-risk transactions
  • How to investigate potentially fraudulent transactions
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Again, having a payment facilitation consulting company like RPY Innovations as your partner can help you in setting up and establishing these policies. Together, you can create unique policies specific to your company that meet your customer’s needs while ensuring your business’s productivity and integrity. 


Starting a payment facilitator business can be a lucrative opportunity with the increasing demands for online payment processing thanks to the rising trends of online transactions. 

Getting the help of payments consultants at RPY Innovations can be extremely significant not only in getting approved as a payment facilitator, but also in managing your ongoing payment facilitator business to ensure it stays secure, reliable, and profitable. 

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