The digital economy demands more streamlined and efficient payment systems, particularly for businesses eager to enhance their transaction capabilities. This need has given rise to the payment facilitator model. This transformative approach simplifies electronic payments for businesses, large and small. By providing a more integrated and less cumbersome alternative to traditional merchant services, payment facilitators enable rapid onboarding, robust transaction monitoring, and improved financial control for their clients. This article delves into the intricacies of the payment facilitator model, exploring its key players, operational functions, and the significant benefits it offers to modern businesses.

Overview of the Payment Facilitator Model

The payment facilitator model represents a significant evolution from traditional merchant services systems. Traditionally, businesses seeking to accept credit card payments had to navigate the complex process of acquiring a merchant account through a bank or bank-sponsored firm, often facing lengthy delays and stringent requirements. Payment facilitators simplify this by maintaining a master merchant account that allows them to onboard customers, or sub-merchants, swiftly and efficiently.

Key Benefits of the Payment Facilitator Model:

  • Accelerates business setup
  • Reduces administrative burdens
  • Expedites electronic payment processing
  • Enhances operational efficiency
  • Improves customer satisfaction
  • Facilitator’s infrastructure manages the transaction flow
  • Streamlined financial transactions

Key Players in the Payment Facilitator Ecosystem

The payment facilitator model incorporates several pivotal roles that ensure the seamless operation of payment processes. These roles include:

Payment Facilitators

  • Provide the necessary infrastructure and services for sub-merchants to process payments.
  • Handle critical tasks such as underwriting and onboarding.
  • Ensure a smooth integration into the payment system.


  • Businesses that utilize the facilitator’s platform to accept electronic payments.
  • Benefit from streamlined processes, allowing them to quickly start accepting payments.
  • Avoid the traditional complexities of setting up a merchant account.

Acquiring Banks

  • Sponsor the facilitators, underwrite them, and assume associated risks.
  • Play a crucial role in regulatory and compliance aspects.
  • Maintain oversight to ensure transaction integrity and security.

Payment Processors

Payment Processors are involved in the actual processing of transactions. They link with card networks to handle the authorization and settlement of payments, ensuring that payments are processed efficiently.


Sponsors may include acquiring banks or other financial entities. They support payment facilitators’ entry into the market, often providing the technological and financial infrastructure necessary for operation.

The Functions of a Payment Facilitator

Payment facilitators streamline the electronic payment process through several key functions that differentiate them from traditional models:

  • Underwriting and Onboarding: Payment facilitators quickly verify sub-merchants legitimacy using automated systems for low-risk candidates and manual reviews for others. This speeds up the integration process, allowing businesses to begin transactions almost immediately.
  • Transaction Monitoring: Facilitators oversee activities within their network to detect and address fraudulent or anomalous transactions. Utilizing advanced software helps maintain a secure transaction environment, which is essential for protecting both the facilitator and the sub-merchants.
  • Merchant Funding: Facilitators manage and reconcile transactions processed by sub-merchants. They often take charge of the funding process, enabling quicker payouts than traditional methods and providing a better experience for sub-merchants.
  • Chargeback Management: Facilitators manage this jointly with acquiring banks. They facilitate the documentation and dispute resolution processes required during chargebacks, ensuring compliance and effectively mitigating financial risks.

Who Becomes a Payment Facilitator?

Increasingly, software companies are recognizing the benefits of adopting the payment facilitator model. This model is particularly popular among businesses that integrate payment processing within their software solutions.

Industries Adopting the Payment Facilitator Model

  • Invoicing & Billing: Companies in this sector use the payment facilitator model to streamline payment processing directly within their software, enhancing user experience and efficiency.
  • POS Systems: Point-of-sale systems benefit from integrating payment processing, offering seamless transactions, and improving overall customer satisfaction.
  • E-commerce: E-commerce platforms use the payment facilitator model to control the entire payment process, providing tailored solutions and dynamic fee structures.
  • Healthcare Management: Healthcare software solutions adopt this model to manage payments more effectively, ensuring smoother operations and better financial management for healthcare providers.

By becoming payment facilitators, these companies gain significant control over the payment experience. This extends from onboarding to transaction processing, allowing for customized reporting and tailored fee structures. This autonomy enhances user experience and opens up additional revenue streams, such as adjusting processing fees dynamically.

The adoption of the payment facilitator model also contributes to a company’s competitive edge. Companies like Square and Shopify have shown that integrating payment processing can enhance product value, increase sales, and reduce customer churn.

How Does a Company Become a Payment Facilitator?

The process of becoming a payment facilitator involves several important steps, beginning with a detailed assessment to guarantee a positive ROI (return on investment). This evaluation typically includes analyzing the potential revenue from transaction fees versus the costs associated with setting up and maintaining the facilitator infrastructure.

Developing Policies and Procedures is an essential next step. This includes creating guidelines for underwriting sub-merchants, establishing transaction monitoring protocols, and setting procedures for managing chargebacks and fraud. Tailoring these policies to specific industries or risk profiles helps maintain operational integrity and compliance with regulatory requirements.

Building the Necessary Infrastructure is vital. This encompasses the technical systems for managing applications, conducting KYC checks, processing transactions, and providing real-time data to sub-merchants. Efficient infrastructure ensures that sub-merchants can be onboarded quickly and transactions are processed securely and reliably.

Finally, Signing an Agreement with a Sponsor, such as an acquiring bank or payment processor, is required. This partnership provides the legal and operational framework necessary for a company to operate as a payment facilitator. Once these steps are completed, a company can begin servicing sub-merchants under its facilitator model, using the infrastructure and relationships established to maximize its business potential.

Zift – Your Ideal Partner for Payment Facilitation

The adoption of the payment facilitator model marks a significant evolution in how companies manage electronic payments. By centralizing the payment process and offering complete control over transactional operations, companies can greatly improve their operational efficiency and customer satisfaction. As more companies realize the benefits of becoming payment facilitators, we can expect continued growth in this sector, bringing more streamlined payment solutions to a broader range of industries.

With its advanced payment processing solutions, Zift leads this transformation, providing customized services that cater to the specific needs of modern businesses. For those looking to integrate or improve their payment systems, Zift offers a compelling pathway to becoming successful payment facilitators. By partnering with Zift, businesses can avoid the common pitfalls of traditional payment systems, ensuring a smoother, more efficient transaction process that ultimately boosts both customer satisfaction and operational efficiency.