Everyone in payments is talking about it. You might hear it’s really easy to do. It’s PayFac, and it is one of those concepts that’s defined differently depending on who’s doing the talking. PayFac is exciting and can be rewarding, but it’s not as easy as you might have heard and isn’t necessarily a fit for everyone.  

What is a PayFac?

A PayFac, or payment facilitator, was originally defined by Visa® and Mastercard® to describe the entity that is officially doing business with the card brands. When PayFac became a buzzword among software platforms and the many businesses trying to sell to them, the meaning of the word started to blur.

Payment facilitation helps you monetize card payments by putting you into the payments flow. Most people think of it as just software, but card brands officially define PayFac as the merchant of record. Based on that definition, PayFacs take over the merchant underwriting process from the acquiring bank. That means you assume the risk associated with the transactions processed on your platform. If a business using your platform does not deliver the goods, you need to make it right with the purchaser.

If you’re a PayFac based on the official card-brand definition, you’re monetizing risk that would otherwise be assumed by an acquiring bank. You do that by negotiating card processing fees and charging businesses to use your service. Sometimes it even works well for software platforms.

But here’s the best part: you don’t have to be a conventional PayFac based on the official card-brand definition to monetize payments.

Take only the risk that’s right for you

Come talk to us. We can help you understand first, if payment facilitation makes sense and second, the best model for you to monetize payments. We’re not only an acquiring bank but also a direct processor, so we understand every aspect of the payments space. We help you take the first step from software platform to monetizing payments—even starting down the path of becoming a full-fledged PayFac.

You can take on as much risk as you want now, and graduate to more risk later. You can integrate some of the benefits of a PayFac solution or choose to be a full-fledged PayFac.

The way J.P. Morgan defines a PayFac expands upon the official card brand definition. It’s not about who the card brands are doing business with—the acquiring bank or the would—be PayFac, it’s about payment facilitation and money transfer.

You can be a PayFac without being the merchant of record if you don’t own the inventory. All those businesses that sell on your platform can start using your integrated payment services. You can charge them for the privilege, but you don’t have to assume the merchant underwriting risk, the fraud risks or the chargeback operations, unless you want it.

Think of marketplaces that connect buyers and sellers and don’t own any of the product. Or social platforms where millions of people post images of products and others want to buy what they see. Those platforms could be PayFacs and none of them need to take on the risk associated with becoming the merchant of record or processing payments.

A variety of businesses utilize PayFac platform capabilities

  • Key above car icon.


    Insurers might offer end-users access to third-party services, such as car rentals when a customer’s car is in the shop, or hotel reservations after an apartment fire. Those insurers also make payouts to end-users and others. If they’re not a PayFac, insurers have to connect with multiple parties to take care of those transactions.

  • Utility icon.


    PayFac’s enable multiple utilities to invoice and collect payments and monetize all the transactions that take place on their platforms.

  • E-commerce icon.


    Imagine the possibilities with online gaming platforms hosting multiple games that offer in-app purchases. Or a ticketing platform that connects attendees with a variety of events and associated services, including valet parking and concessions. PayFac platforms can accept payments, make payments and monetize each transaction.

Everything you need for your platform’s commerce layer

There’s a bigger world of payment monetization than just accepting payments. After all, there’s always a reason to pay others. Most platforms are familiar with the activities around accepting payments, or pay-in. Many have evolved their financial-risk profile to making payments, or pay-out as part of a corporate treasury operation. And some are ready to advance to payment processing, which involves buying and reselling merchant services.

J.P. Morgan offers a comprehensive solution that you can use to accept and make payments.

PayFac services licensed through fintech operations require the sponsorship and support of an acquiring bank.

The path to pay-in, pay-out and wholesale banking is one path at J.P. Morgan—not three or four. By connecting the dots with one firm, you take away a failure point to enable seamless operation of the commerce layer behind your platform. It feels like one provider because it is.

We are an acquiring bank, a direct processor, and also connected to one of the largest card issuers in the U.S.

We understand the space, follow the rules, and believe in taking on only necessary risk.  Payment facilitation is a big decision with major implications. When you work with a trusted brand, your customers and investors will recognize the value that you’re offering. Your merchants can be confident their funds are protected.

Ready to take the first step?

We’ve taken clients from a marketplace to a merchant of record and full-fledged PayFac—and options in between. We can help you navigate a complex space, avoid unnecessary risk and compliance overhead, and set you up to thrive in an evolving marketplace that is continually incorporating new payment options. We can also help you set up your commerce layer to license to others—to further expand your PayFac universe.

Contact us to speak with an experienced J.P. Morgan representative about monetizing payments and to discuss how we can help support your business.


Get in touch