How much more does a PayFac earn than an ISO?
Industry benchmarks put an owned PayFac at roughly 60 to 100 basis points of net take on volume, against 10 to 40 basis points for a retail ISO arrangement. The gap pays for scheme registration, risk capital, funding operations and a compliance team that an ISO does not need.
In detail
Industry benchmarks put an owned PayFac at roughly 60 to 100 basis points of net take on volume, against 10 to 40 basis points for a retail ISO arrangement. The gap pays for scheme registration, risk capital, funding operations and a compliance team that an ISO does not need.
How each model earns
The ISO earns a residual on the acquirer’s price: a share of the processing fees each merchant pays, for as long as the merchant stays. It does not touch funds and does not carry credit or fraud risk, which is also why its share is small. The PayFac sets its own price above a wholesale buy rate, and keeps the spread: it buys processing at interchange-plus from its acquirer and sells blended or IC++ pricing to sub-merchants.
What the extra margin costs
The PayFac margin is paid for. A 2026 market study estimates roughly $200,000 to $800,000 of upfront build for a PayFac-alternative model, and $1 million to $3 million for a rented full PayFac stack. Visa’s third-party agent program charges $5,000 USD for initial registration and annual renewal, per region. The PayFac also carries the liability: chargebacks, fraud losses and fines of every sub-merchant roll up to it, and then to the acquirer.
More detail in our #PayDecoding episode on PayFac vs ISO.