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ReadersSpeak

Traditional processors versus payfacs create and manage individual merchant accounts for each
business they serve. When it comes to pricing, traditional
've been reading about the payments industry processors typically charge interchange fees, processing
and am curious about payfacs. It seems the lines fees, and additional charges for such services as charge-
between entities are constantly blurring. And pay- back mitigation and PCI compliance, often making indi-
I facs and other fintech companies that provide new vidual merchant bills difficult to understand. Payfacs usu-
technology are shifting boundaries further. I'd like to ally have a much simpler pricing model featuring flat-rate
know more about the distinction between traditional pro- fees or simple tiered pricing based on volume, which tends
cessors and payfacs. to be much easier for merchants to understand.
Sally Arnold
MBA student Both traditional processors and payfacs offer merchants
Sally, the ability to accept payments from a range of sources.
They both also integrate with POS systems, ecommerce
Thank you for your question. It is true our industry is platforms and emerging payment acceptance channels.
dynamic, with new technology being introduced rou- They also both are expected to adhere to PCI standards,
tinely. The main differences between payfacs, which are as well as employ encryption, tokenization and other
now well entrenched in the payments ecosystem, and schemes to protect sensitive data. Plus, they both offer such
traditional processors are in the areas of onboarding and added business services as analytics, invoicing, recurring
underwriting, aggregation versus individual merchant billing and more. For more information about payfacs, en-
accounts, and pricing structure. Traditional payment pro- ter "payfac" in the search function on our homepage, www.
cessors usually undertake a detailed underwriting pro- greensheet.com, and you'll see a list of relevant articles go-
cess to establish a merchant account. Payfacs use simpli- ing back several years.
fied onboarding: businesses can sign up and start accept- Editor
ing payments quickly without going through individual
underwriting. Next-gen disruptors
Please tell us what your experience has been with payfacs,
Payfacs use aggregation, meaning multiple businesses and what new technology you believe is poised to become
share a single merchant account; traditional processors a major disruptor at greensheet@greensheet.com.

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