Payment Facilitators vs. Payment Gateways

Do you know the difference between a payment facilitator and a payment gateway? And how to choose the right one for your business? We’ve got you covered! The world of online payments is complex, with various players ensuring transactions are processed smoothly and securely. Not only will we explain the key differences between payment facilitators and payment gateways, but we’ll also guide you through choosing the best option for your business needs.

Payment Facilitators vs. Payment Gateways

Payment facilitators and payment gateways are both crucial in processing online transactions, but they serve different roles.

Payment Facilitator

A payment facilitator (PayFac) simplifies the merchant account process. Instead of businesses setting up their accounts, which can be time-consuming, PayFac allows them to operate under a master merchant account. This setup is particularly beneficial for small businesses or those looking to start accepting payments quickly.

Payment Gateway

A payment gateway, on the other hand, is a technology that securely transmits payment data from the merchant to the acquiring bank and payment processors. It’s the digital equivalent of a physical point-of-sale terminal in a store.

Comapison Table between Payment Facilitators & Payment Gateways

FeaturePayment FacilitatorPayment Gateway
Setup TimeQuick, often instantVaries, can be lengthy
CostHigher transaction feesLower transaction fees, but may have setup costs
ControlLess control over payment processingMore control and customization options
Risk ManagementHandled by the PayFacManaged by the merchant

Which is the Best Option?

The choice between a payment facilitator and a payment gateway depends on your business’s specific needs. – If you’re a small business looking for a quick and easy way to start accepting payments, a payment facilitator might be the way to go. – However, if you’re a larger business with a high volume of transactions and need more control over your payment processing, a payment gateway could be more suitable.

FAQs

1. What is a Payment Facilitator?

A Payment Facilitator (PayFac) is a service provider that simplifies the process for businesses to accept payments. Instead of each business needing to set up and manage its merchant account, PayFac allows it to operate under a master merchant account. This makes it easier and faster for small businesses and startups to start accepting payments online.

2. How does a Payment Gateway work?

A Payment Gateway is a technology service that securely transmits payment information from the merchant’s website to the payment processor. It encrypts sensitive credit card details to ensure that information is passed securely from the customer to the acquiring bank. Payment gateways are essential for online transactions as they help to prevent fraud and protect customer information.

3. Which should I choose: Payment Facilitator or Payment Gateway?

The choice between a Payment Facilitator and a Payment Gateway depends on your business’s specific needs. If you’re a small business looking for ease and speed in setting up payment processing, a Payment Facilitator might be best. For businesses that require more control over their payment processing and have a higher transaction volume, a Payment Gateway could be more suitable. Consider factors like transaction volume, setup time, and control over the payment process when making your decision.

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Celine Brooks Writer
Celine is a seasoned writer with six years of experience in the Fintech industry. She holds a Master's degree in Business Administration from the University of Nebraska. She prides herself on writing articles that are well-received and loved by her readers.
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