Does a PayFac need to register with Visa and Mastercard?
Yes. The sponsoring acquirer registers the PayFac with each scheme after a risk and financial review. Visa’s third-party agent program charges $5,000 USD for initial registration and for each annual renewal of ISO and PSP agents per region; Mastercard registration follows Rule 7.8 of its rules.
In detail
Yes. The sponsoring acquirer registers the PayFac with each scheme after a risk and financial review. Visa’s third-party agent program charges $5,000 USD for initial registration and for each annual renewal of ISO and PSP agents per region; Mastercard registration follows Rule 7.8 of its rules.
PayFac vs ISO: the seven differences that matter
Visa’s third-party agent program charges $5,000 USD for initial registration and annual renewal for ISO and PSP categories (PSP is Visa’s registration term covering payment facilitators), per region. The PayFac also needs a documented risk and financial review by the acquirer before its first transaction.
What is PayFac-as-a-service, or a managed PayFac?
Most software platforms want PayFac economics without PayFac operations. PayFac-as-a-service (PFaaS) answers that: a registered PayFac or acquirer provides the master merchant account, the scheme registration, the risk program and the funding engine, and the platform runs onboarding, pricing and the merchant experience under its own brand. Mastercard describes the model as one where PFaaS platforms include capabilities to handle the regulatory compliance and risk management burden, and expects hundreds of new PayFac formations a quarter.
More detail in our #PayDecoding episode on PayFac vs ISO.