Payment Facilitators act as intermediaries between merchants and financial institutions such as banks, card networks (such as VISA and Mastercard), and payment processors.
What is a Payment Facilitator (PF)
A Payment Facilitator, is often seen as similar to a Payment Service Provider (PSP). But a Payment Facilitator is a company that enables merchants to accept electronic payments from their customers.
In the case of VISA and Mastercard, Payment Facilitators are referred to as Registered Third Party Service Providers (TPSPs). These companies are registered with VISA and/or Mastercard and are authorized to provide payment services on behalf of merchants.
To become a Payment Facilitator with VISA and Mastercard, companies must be a financial licensed entity and go through a rigorous application and vetting process. This includes demonstrating their ability to comply with various regulations and security standards, as well as providing evidence of their financial stability and risk management capabilities.
Once a company becomes a registered TPSP (Third Party Service Provider) and PF (Payment Facilitator) with VISA and/or Mastercard, they are responsible for ensuring that their merchant clients comply with the rules and regulations of the card networks. This includes things like properly processing transactions, maintaining proper records, and protecting customer data.
The benefit of being a Payment Facilitator
Payment Facilitators typically charge merchants a fee for each transaction processed. This fee can vary depending on a number of factors, such as the type of transaction, the merchant’s industry, and the level of risk associated with the transaction.
Overall, Payment Facilitators play a critical role in the electronic payments ecosystem, enabling merchants of all sizes to accept electronic payments and helping to facilitate commerce around the world.
Responsibility as a PF
Some of the key responsibilities that a Payment Facilitator typically has:
- Onboarding and underwriting merchants: Payment Facilitators are responsible for vetting and approving merchants to ensure that they meet certain eligibility criteria. This can include verifying the merchant’s identity, assessing their financial stability and creditworthiness, and reviewing their business practices to ensure compliance with relevant regulations.
- Payment processing: Once a merchant is onboarded and approved, the Payment Facilitator is responsible for processing their electronic payments. This involves managing the technical infrastructure needed to accept payments, such as payment gateways and point-of-sale terminals, as well as ensuring that transactions are securely processed and settled.
- Compliance and risk management: Payment Facilitators are responsible for ensuring that their merchant clients comply with applicable laws, regulations, and card network rules. They must also manage and mitigate the risks associated with electronic payments, such as fraud and chargebacks.
- Settlement and reconciliation: Payment Facilitators must manage the settlement and reconciliation of electronic payments between merchants and their financial institutions. This involves reconciling transaction data, managing settlement timelines, and ensuring that funds are transferred to the appropriate accounts in a timely and accurate manner.
- Customer support: Payment Facilitators are typically responsible for providing customer support to merchants who use their services. This can include answering questions about payment processing, troubleshooting technical issues, and addressing any concerns or complaints that merchants may have.
- Fees and pricing: Payment Facilitators typically charge merchants fees for their services, which can vary depending on a number of factors such as the type of transaction, the merchant’s industry, and the level of risk associated with the transaction. Payment Facilitators must be transparent about their fees and pricing and ensure that they are competitive and fair.
Overall, Payment Facilitators play a critical role in enabling merchants to accept electronic payments and helping to facilitate commerce. However, they also have significant responsibilities in terms of compliance, risk management, and customer support, which are essential to ensuring the integrity and security of electronic payments.
Some of the most well known Payment Facilitators
| Payment Facilitator | Regions of Operation |
|---|---|
| PayPal | Global |
| Stripe | Global |
| Square | United States, Canada, Australia, Japan, and the United Kingdom |
| Adyen | Global |
| Klarna | Europe, United STates |
| Trustly | Europe |
| Authorize.Net | United States |
| PayU | Global |
| Ingenico | Global |
| iZettle | Europe, United States, Latin America |
