Configuration requirements for PAYFAC
A Payment Facilitator (PAYFAC) serves as a specialized payment service provider that collaborates closely with an acquiring bank. Its primary role involves constructing robust systems for handling payment transactions, facilitating the onboarding of sub-merchants, and managing risk factors. Once the PAYFAC has established systems and processes, which adhere to the guidelines set forth by card networks and align with the acquiring bank’s agreement, it can seamlessly offer comprehensive payment processing solutions to merchants. These merchants, commonly referred to as “sub-merchants,” benefit from the streamlined services provided by the PAYFAC model. Notably, in this model, sub-merchants are relieved of the direct interaction with an acquiring bank, simplifying their payment processing experience.
PAYFAC
Some of the high-level responsibilities of a PAYFac are below:
Management and Oversight of All Merchants: The PAYFAC is tasked with supervising and ensuring the smooth functioning of all merchants within its network.
Tracking and Monitoring of Sub-Merchant Activity: Vigilantly observing the activities of sub-merchants falls squarely within the PAYFAC’s purview.
Auditing of Merchant Activity: The PAYFAC assumes the critical responsibility of auditing merchant transactions and operations.
AML and KYC Compliance: Complying with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations is paramount. The PAYFAC vets’ sub-merchants to maintain regulatory adherence.
Maintaining PCI Compliance Standards: Upholding Payment Card Industry (PCI) compliance standards ensures secure and reliable payment processing.
Payment Processing for Sub-Merchants: The PAYFAC efficiently handles payment processing on behalf of sub-merchants.
Settlement of Funds to Sub-Merchant Accounts: Facilitating timely fund settlements to sub-merchant accounts is a crucial aspect of the PAYFAC’s role.