What is a Payfac? Understand the Payment Facilitator model
A payfac is a platform that intermediates payments between consumers, payment operators (card operators, banks, PSPs, etc.), and merchants. Learn more here!
What is a Payfac? Understand the Payment Facilitator model

The more the financial market becomes digital, the more processes that were previously more complex to execute are changed. Would you like an example? Payment methods are not only implemented faster but are also more numerous: Pix, bank slips, deposit, credit, and debit cards are the main examples.

Even so, to really understand how technology affects payment methods, it is necessary to mention the type of payfac or payment facilitator. In other words, a mediator for all transaction processing.

To help you better understand this idea, today we will discuss what it is all about and what a great technology this is for your company. Check it out!

What is a payment facilitator?

A payfac is a platform that intermediates payments between consumers, payment operators (card operators, banks, PSPs, etc.), and merchants. It offers a system capable of processing payments, providing multiple means for completing a transaction, such as credit cards, debit, e-wallets, instant transfers, bank transfers, and cash in one place.

The facilitator company charges a fee to process each operator, in addition to a fee for transactions depending on the location of the purchase.

How were payfacs popularized?

Although they are currently widely used in online purchases, payfacs are nothing new in the financial world. They emerged in the late 1990s and were aimed at small and medium-sized businesses, as they needed a way to accept less bureaucratic payments. With easier and also less expensive setups, large companies were fully supported and served by banks.

Over the decades, as digital platforms also grew in the daily lives of consumers, this kind of service also gained more space. This also led to a significant increase in cross-border purchases and, for companies aiming to sell beyond their own countries, payfacs became fundamental to accept the target-countries’ local payment methods and local currencies.

So now, people want faster ways to process payments and payfacs correspond to this purpose. In countries like Mexico, Brazil, Uruguay, and Argentina, local credit cards and cash-based transactions are among the most used methods.

Also, according to a study by Americas Market Intelligence, 60% of small businesses and customers want faster payment methods. 47% want agility, as they want immediate access to money. In addition, markets such as Mexico, Peru, Colombia, Brazil, Guatemala, Argentina, and Chile are aiming to adopt faster payment.

How does a payfac work?

Payfacs work quite simply. Once the payment is processed, they pool the resources to send the information to the merchant’s institution. In practice, the consumer makes the purchase on the website, the money is charged and collected by the facilitators, who, after a certain period, transfer it to the merchant’s account.

For this to work in a secure way, each purchase has customer data, payment origin region, and how it was processed (Pix, debit, credit, etc).

What are the features of a payfac?

Providing the best service for customers is a part of a merchant’s routine. This, of course, also involves finding ways to make shopping easier. Problems while processing the transaction and low variety in payment methods are common occurrences that affect daily lives greatly.

As an intermediary, a payment facilitator can bring solutions to these problems to merchants. Especially, for a more complete service for digital payments. Below, we highlighted some of the main features. Check them out!

Full integration

Before the popularization of payment methods, the merchant needed to contact an acquiring bank and open an account. In addition to taking a long time, it was a very bureaucratic procedure for everything to be integrated.
One of the advantages of facilitators is that they have more agile methods of integration and are able to adapt more easily to the merchants’ systems. Integrating with several different payment methods and processes falls to the payfac, not to the merchant.

Transaction monitoring

Payment facilitators are also responsible for processing transactions. This means that they monitor all the way until the operation is confirmed. As part of this feature, analysis of unusual or suspicious activity is critical, in addition to having policies to determine in what way a transaction is considered suspicious.

Strong risk analysis technology is essential for selling online nowadays, since online fraud is a major problem — even more so for companies selling to Latin America, a region with high fraud attempt numbers.

Chargeback management

Payfacs are also responsible for managing chargebacks with the acquiring institution. In more common situations, the merchant needs to send the data about the chargeback request to the bank. However, with a payment facilitator, the information is sent to the institution that makes the transfer to the merchant’s account and they handle the request.

What is the difference between payfacs and ISO?

ISO (Independent Sales Organization) and payment facilitators have very common characteristics, mainly in relation to function — since both are intermediaries between merchants, payment, and customers. However, there are still differences in their scope. Let’s find out more below!

ISO is a third-party service

ISO are third-party payment processing companies that manage business accounts for a financial institution. They have a relationship with acquiring banks and are responsible for managing all transaction details on behalf of the merchant.

More flexible payments

A payfac has a much more flexible payment system and a wider variety of payment methods, so much so that it can be carried out through the linked bank account. The facilitator company collects and manages the money. This doesn’t happen with ISO, as it never handles money directly.

Wider range of features

More than mere payment processors, facilitators are able to assist the merchant in various processes, including offering specific services for the merchant to increase their service quality.

A payfac has many more features compared to ISO. The former processes payments, integrates and reconciles, provides reports, links payments, and settles transactions. The latter only processes transactions and does not offer as many possibilities for the merchant.

Processing relationships

ISOs act more like resellers of services to payment institutions. This means that the more partners they have, the more products they can offer, therefore, they will be more flexible. This is totally different from payfacs. They centralize all the services so they usually don’t involve more than two partners.

What are the benefits of using a payment facilitator?

We could say that one of the main benefits is accessing a series of payment services in one place. However, the advantages go further. Below, we will show you what they are. Check them out!

Variety in payments

For sellers, this is a very positive matter. Giving access to various forms of payment is not only a way to speed up earnings and prevent consumers from giving up on the purchase, it is also a way to help them. After all, the more methods available, the more are the chances of purchase, especially if the company offers local payment methods.

However, it is not always simple to provide this possibility, mainly to integrate the financial institution with the environment. In this case, hiring a payfac prevents the seller from having to deal with all of the sector’s bureaucracy.

Wider support

It is much easier to integrate sales platforms with payment facilitators. For a retailer that is just starting out, having this advantage means savings, as more advanced integrations require more cost as well as less time spent.

Less bureaucracy

Another great advantage relates to bureaucracy. Other ways of processing payment sometimes require the merchant to contact the bank directly. In addition to taking time because of the verification time of these institutions, it is still quite bureaucratic.

At this point, payfacs are better as they do not require a series of criteria, such as that the merchant being a legal entity in the country they’re selling to. In addition, some even allow the merchant to receive in advance the amount from purchases in installments: although the customers pay monthly, merchants receive the money all at once.


Facilitators’ processing systems handle transactions directly. They not only manage, but also monitor suspicious behavior in operations by verifying the origin of each of them.

This guarantees the shopkeeper’s safety without having to invest in a separate protection system. For new sellers, this is also a great way to build credibility.

How can BoaCompra help your business?

When it comes to payment platforms, BoaCompra is a good example of what it is like having agility and security in your business. With a wide coverage of local payment methods and local currencies, BoaCompra works with more than 140 methods in 17 Latin American countries, plus Portugal, Spain, and Turkey.

BoaCompra has payment solutions that integrate businesses worldwide. It provides access to tools that help to facilitate a series of financial processes that would be much more bureaucratic with traditional banks.

For you to understand better, we have highlighted some of BoaCompra’s main solutions. Check them out!

Payment processing solution

The first payment solution that BoaCompra offers is Payment Processing. This is a way to facilitate transactions for international merchants. The merchant can settle into their account, anywhere in the world, money from transactions made in Latin America.

It is an API solution that allows international companies to offer over 140 local payment methods in 17 Latin American countries, from debit and credit cards to instant transfers, cash-based payments, and e-wallets in local currencies.

Thus, BoaCompra helps foreign merchants localize their businesses in Latin America not only through payments, but also with robust risk analysis, local customer support, and dedicated account management.

Another benefit is that, being part of PagBank PagSeguro, BoaCompra operates as a credit card acquirer in Brazil, which means even smoother, more reliable payment processes.

Payout solution

BoaCompra’s Payout is intended for companies that need to make payments to payees in Brazil directly in local currency, in a fast way. This is usually a bureaucratic, time-consuming process, but BoaCompra’s solution brings agility and innovation to it.

With the disruptive Payout model, there is no bureaucracy for sending money, in addition to not charging the common bank fees for this type of transaction. For international transfers, financial institutions usually charge an amount that varies according to their guidelines.

Among the advantages of this solution are:

  • Single/mass payouts: the possibility of making multiple payments: it is possible to process transactions for several people and also for a single customer. There is no limit to send your payments, as everything is done simply and quickly;
  • Immediate transfers in local currency: there is no delay in sending the money. The amount arrives in your partners’ free digital PagBank account in minutes;
  • Access to beneficiaries via PagBank, the second biggest digital bank in Brazil, with 13.1 million active users.
  • High level of security: transactions managed by BoaCompra are regulated by the Central Bank, in addition to the company being PCI DSS certified, ensuring safe operations, with data protection, while constant monitoring and testing for failures and fraud.

By reading this article, you now understand what payfac is and how it works: a payment intermediary that helps merchants process and collect their sales. In addition, it offers a number of features to make managing transactions easier. This makes it a highly beneficial alternative for merchants, saving up money and time and allowing the company to focus on its core business.

Would you like to know more about payment methods? Would you like to keep learning about sales operations? Then, get in touch with us and learn how BoaCompra by PagSeguro can boost your business in Latam!

Nova call to action
BoaCompra at MRC Vegas 2022
Economy in Colombia: What’s the perspective for 2022