Traditional Merchant Services vs. Payment Facilitation  

In today’s electronic ecosystem, software companies have an array of options to create unique payment experiences for consumers. Among these options, two stand out: traditional merchant processing and payment facilitation.  

The choice between traditional merchant processing and payment facilitation significantly impacts multiple things. This includes how merchants sign up, payment timelines, splitting payments, billing choices, merchant statements, and more. Let’s dissect these differences and their implications for software developers and agents.  

  Traditional Merchant Processing  

Merchants first accepted credit cards electronically in 1973, marking the inception of traditional merchant processing. In this model, businesses apply for a Merchant ID (MID) assigned by a sponsoring bank. Each MID is unique to a physical merchant location or corporate entity. Traditional processing involves an application process for underwriting, usually taking 2–3 days for approval.  

Traditional processing offers various point-of-sale and e-commerce solutions. Hardware manufacturers or payment processing partners can integrate with these solutions. Billing options include flat rate, tiered, dual pricing, and interchange plus pricing models, with additional fixed fees.  


Payment Facilitation  

Payment facilitation simplifies the merchant boarding experience and expands optionality with settlement. In this model, software companies can become payment facilitators by applying with a payment processor and sponsor bank. They get a master MID to onboard sub-merchants quickly and easily. Once approved, sub-merchants can begin processing within minutes.  

  Payment facilitation enables split payments among multiple recipients before settlement, supporting split payment functionality. It also enables a marketplace processing model, facilitating resale underneath the master merchant. 

However, this does have some limitations. This model offers limited billing options, including flat rate or tiered pricing with authorization fees. The point-of-sale options are also expanding beyond the original e-commerce setup.  


Explore Payarc’s Payment Facilitator Platform:  

  • Split Payments: Gain unprecedented control over funding instructions with Payarc’s Split Payments API or Virtual Terminal. Flexibility rules as users can divide transactions into smaller accounts or hold them without processing.  
  • Payment Integration Options: Elevate automation with Payarc’s APIs, enhancing every stage of the customer lifecycle. Our onboarding process is easier and funding happens faster. Plus, we can split payments among multiple parties in one transaction.  
  • Dashboard Experience: Each ISV sub-merchant receives a unique ID, granting access to a fully customized dashboard. Manage daily tasks effortlessly, from reconciling transactions to handling chargebacks, all within an intuitive and efficient interface.  
  • ID Provisioning/Onboarding: Payarc’s PayFac Program offers flexible onboarding options powered by advanced technology for real-time automated checks. Choose between a hosted UI or API integration for a quick, digital onboarding experience tailored to your needs.  
  • Electronic Payment Acceptance Options: We have various electronic payment options available through our PayFac program. These options include cards and ACH transactions. We can customize these options to meet your specific needs and preferences.  
  • Payment methods: Payarc partners with ISV developers to create custom payment interfaces using APIs and iFrames. This allows for easy integration into current systems with a focus on flexibility and customization.  

Discover the Payarc Difference 

We directly partner with software companies and developers, fostering collaboration to craft unique payment experiences. Offering tailored options from APIs to iFrames, we seamlessly integrate into existing or developing workflows, ensuring optimized software experiences through customization. Fuel your growth with Payarc’s Innovative Financial Technology Platform, empowering merchants and technology providers with versatile solutions to meet consumers wherever they transact. Whether through traditional merchant integration or payment facilitator services, Payarc drives business growth with cutting-edge technology.