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Payment facilitator vs. aggregator: a short guide
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Payment facilitator vs. aggregator: a short guide

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There are lots of cogs and gears in the payments cycle and just as many terms used to describe them. Being in the dark on certain points, you might often stumble upon a variety of concepts and ideas. One common point of confusion is the difference between the typical payment process stakeholders — aggregators and facilitators. They are sometimes used interchangeably, but in reality, connote different concepts. Keep calm, we are here to assist and enhance your insights in the payment process. Let’s figure out the differences and similarities between the payment facilitators and aggregators.

Transaction process: who is in?

To better understand the meaning of each concept, let’s clarify who is involved in a transaction process:

  • Card issuer (a bank, who issued a buyer’s card);
  • Acquirer (a bank that processes payments for the merchant);
  • Cardholder (a buyer, who pays for a product or service);
  • Merchant (a business that sells goods and accepts card payments).

A transaction is impossible without these 4 parties. Now let’s find out the difference between the elements that work behind the scenes of each payment.

What is a payment facilitator?

A payment facilitator (or payfac) can be called a service provider for merchants for it usually organises communication between merchants and acquiring banks. When you want to start accepting payments online, you need a merchant account from a payment facilitator, which possesses sufficient infrastructure and proper compliance to process payments. A payment facilitator represents a master merchant and your business will be considered a sub-merchant.

Why choose the payfac model?

  • Quick start & fast onboarding. Getting started is quicker because there are fewer parties involved in the process, so you can start accepting payments almost at once.
  • Better control. You do not depend on a third party to provide merchant support and control the level of service that you provide to your customers.
  • PCI DSS compliance. You may benefit from your master merchant’s PCI compliance and remove this burden from your business.
  • Increased revenue potential. Since you own more control of the process, you will often have a higher revenue share with your payments partner, boosting your bottom line profits.
  • Fraud-control. This burden is also taken care of for you when using a payfac.

It used to take weeks to get a merchant account, but then payfacs came around and simplified the process by creating a sub-merchant platform. It involves a payment facilitator that has been pre-approved for one master merchant account with an acquirer. Payfacs are then able to sign-up merchants underneath their master account as sub-merchants, thus expediting the process of enrollment.

This model is quite appealing to merchants due to the fact that the risk is on the payment facilitators, as they hold the master account. Merchants still can get individual merchant accounts, but it can be a very cumbersome process.

What is a payment aggregator?

A payment aggregator is a service that collects online funds received on the account of an online store and further transfers them to the accounts of the customer company. It allows for working not only with cash on delivery but also with popular systems like Visa or Mastercard, as well as virtual currencies and payment systems.

Currently, a payment aggregator is the only system that allows you to easily and quickly organise electronic settlements, as well as legalise the circulation of electronic money. That makes it necessary for everyone who does business in the virtual space.

Benefits of payment aggregators:

  • Versatility. It combines all possible payment methods into one and eliminates the need to connect each separately.
  • Time-efficiency. Payments take place in seconds.
  • Cost-effectiveness. The commission for paying with a universal payment aggregator is often lower than when paying through a specific payment system.
  • Reports. Merchants can monitor and analyse transactions data according to various criteria.
  • Ease of use. The payment interface is simple and intuitive.

The key difference between an aggregator and a facilitator is that the latter gives every merchant its own MID within its system. The former, conversely only uses its own merchant ID to process transactions.

Both aggregators and facilitators offer similar benefits from the perspective of the end-user. Aggregators usually offer less expensive processing for a low number of transactions due to their simpler model. However, they are not ideal for organisations with high transaction volumes.

Payment facilitator vs. aggregator: how to choose?

If not to look under the hood, these services do not fundamentally differ from each other. However, when choosing a specific service provider for your business, rely on the following points:

  • cost of the commission;
  • list of payment methods: cards, terminals, virtual currencies;
  • level of technical support service;
  • types of business it is designed for (some aggregators serve small businesses well, but can malfunction with the large ones, and vice versa);
  • customers support to quickly resolve issues (this option is essential for small businesses — customers appreciate the level of service and the ability to contact the support at the first need);

Corefy represents a feature-rich platform for payment orchestration that suits businesses of all types. Start accepting payments and making payouts hassle-freely across the globe with ultimate efficiency and safety. Feel free to reach out to us and find out more about what suits your business model best.

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