A white label payment facilitator (payfac) lets a business offer payment processing under its brand, using a third-party provider to handle the underlying technology, compliance, and risk. This streamlines payment management for businesses and allows for a simple, all-in-one checkout experience for customers. Businesses across industries that incorporate integrated payment solutions are primed to add a significant revenue stream to their overall portfolio.

By integrating a white-label payfac into a business’s platform, the business can manage and process payments directly, giving customers an all-in-one branded commerce experience.
Below is an explanation of white-label payfac services: their benefits, how different businesses use them, and important considerations for choosing the right solution. Here’s what businesses should know to select a white-label payfac service that aligns with their goals and paves the way for sustainable growth.

What’s in this article?

• What is a white-label payment facilitator?
  
• White-label payment facilitator vs payment gateway
  
• How do payfacs work?
  
• What types of businesses use white-label payfac?
  
• Benefits of using a white-label payfac
  
• How to choose a white-label payfac
  
• White-label payment facilitator requirements checklist
  
• Stripe’s white-label payfac solution
  
• How Stripe Payments can help
  

What is a white-label payment facilitator?

A white-label payfac, also known as payfac-as-a-service, is a business model in which a company uses a third-party payment facilitator platform to offer payment processing services under its own brand name. It allows businesses to accept credit and debit card payments without needing to set up and maintain their own merchant accounts.

In this model, the white-label payfac provider takes care of the underlying technology, payment processing infrastructure, compliance, and risk management. The business using this service, often an independent software vendor (ISV) or a SaaS provider, can seamlessly integrate payment processing into their product offering, without the complexity of building a payment processing platform from scratch.

Key features of a payment facilitator

A few key features of the payfac model are:

• Simplified sign-up
  Payfacs usually offer a streamlined application process that means a business can get up and running with card payments much faster than if they were to set up a traditional merchant account.

• Underwriting
  The payfac takes on the responsibility of assessing the risk associated with each submerchant. This can include evaluating the submerchant’s credit history, type of business, and potential for fraudulent transactions.

• Pricing
  Payfacs typically charge a flat rate per transaction. This model can be easier to handle for small businesses when compared to the interchange plus pricing model often used by traditional merchant accounts.

• Support
  Payfacs often provide technical support for payment processing, such as APIs for integrating payment processing into a website or app.

• Payouts and reconciliation
  Payfacs manage the entire flow of funds, tracking each transaction from the point of sale to the deposit in the submerchant’s business bank account. They also handle chargebacks and refunds.

• Compliance
  Payfacs are responsible for maintaining compliance with payment card industry (PCI) security standards and other relevant regulations.

Payfacs, which include companies such as Stripe, lower the barrier to entry around payment acceptance, making it easier for small businesses and individual sellers to accept these payments.

White label payment facilitator vs payment gateway

Payment gateways and white label payfacs can offer similar payment capabilities, but they differ in the level of control they give businesses. Here are some differences and similarities:

• Ownership of the merchant relationship: A payfac acts as a “master merchant,” which means that businesses only have a single point of contact for everything from account setup to dispute resolution. Businesses that choose to use a payment gateway will need to maintain several relationships, including with the gateway provider and bank.

• Branding control: A white-label payfac allows you to brand your checkout flow, reports, and other elements with your company’s name. Payment gateways, meanwhile, generally require some type of co-branding.

• Risk, compliance, and underwriting: Payfacs take much of the regulatory and compliance risk, meaning you can usually get approved and start taking payments in minutes with almost no paperwork. Payment gateways typically mean you need to go through a traditional bank application process.

• Revenue opportunities: Payfacs typically charge a higher, flat-rate fee, while payment gateways may charge monthly fees and setup costs.

How do payfacs work?

Payfacs provide a platform through which businesses can handle electronic transactions without needing to set up their own merchant account with a bank or card processor. Here’s a breakdown of the process:

• Apply and get set up
  A business signs up with a Payfac online, which is usually a relatively quick and easy process. The payfac handles the setup of a submerchant account under its master merchant account. This submerchant account is unique to the business and will be used to process its transactions.

• Accept and process customer payments
  When a customer makes a purchase, the business processes the payment through the payfac’s platform. The payfac submits the transaction to the relevant card network (Visa, MasterCard, etc.) through the payfac’s master merchant account.

• Receive funds without managing settlement
  After the transaction is approved, the funds are transferred from the customer’s bank account to the payfac’s master merchant account. The payfac sends these funds to the business’s bank account, minus any fees.

• Offload risk, fraud, and compliance
  Payfacs handle the risk and compliance aspects of payment processing, including fraud detection, dispute resolution, and adherence to Payment Card Industry Data Security Standard (PCI DSS) regulations. This allows businesses to focus on their core operations without worrying about the complexities of payment processing.

• Track performance and get support
  Most payfacs provide businesses with reporting tools to track transactions, monitor sales, and gain insights into their customers’ purchasing behavior. They also offer support services to assist businesses with any issues related to payment processing.

Payfacs simplify the process of accepting electronic payments for businesses by providing businesses with a ready-to-use platform and handling transaction processing, compliance, and risk management. Many payfacs also offer users additional services such as card issuing, subscriptions, financing, and fraud protection.

What types of businesses use white-label payfac?

Many types of businesses can benefit from using white-label payfac services. These businesses often look for ways to add value for their customers, and the convenience of integrated payments can be a key selling point. Here are some examples:

• Independent software vendors (ISVs)
  ISVs often use white-label payfac services to integrate payment processing directly into their software. For example, an ISV that develops software for the restaurant industry might use a white-label payfac to enable restaurants to accept online orders and payments directly through the software. This way, restaurants can manage their operations and payments from one platform, which can simplify their workflows and enhance customer experience.

• Ecommerce platforms
  Ecommerce platform providers can use a white-label payfac to provide their sellers with integrated payment processing. For instance, an ecommerce platform like Etsy or Shopify could use a white-label payfac to allow individual sellers to easily accept payments using a variety of payment methods, such as credit and debit cards, digital wallets, bank transfers, and buy now, pay later (BNPL). This can make the platform more appealing to sellers, as they can get set up quickly and start selling products right away.

• Marketplaces
  Online marketplaces, such as home services platforms or gig economy platforms, can use white-label payfac services to handle transactions between buyers and sellers. For example, a platform like TaskRabbit could use a white-label payfac to facilitate payments between customers and service providers. The platform can manage the entire transaction process, ensuring funds are securely transferred from the customer to the service provider.

• SaaS companies
  Software-as-a-service (SaaS) companies often use white-label payfac services to enhance their offering and generate additional revenue. For example, a SaaS company that offers CRM software might use a white-label payfac to enable businesses to process customer payments directly within the CRM platform, thereby streamlining significant aspects of their overall operations.

• Event management companies
  Event management companies might use white-label payfac services to enable ticket sales and registration fees for events. For instance, an event management platform could use a white-label payfac to process payments for event registrations, making it easier for attendees to sign up and pay for events.

By using white-label payfac services, these businesses can offer a more comprehensive solution to their customers, refine and reduce friction in their payment process, and potentially generate additional revenue. However, businesses using white-label payfac services also need to consider other responsibilities associated with offering payment services, such as customer support and dispute management. We’ll look at these considerations below.

Benefits of using a white-label payfac

For businesses seeking to integrate a seamless payment processing solution into their offerings, a white-label payfac can offer a host of benefits. The infrastructure and capabilities of a dedicated payfac allow businesses to enhance their services, providing a unified experience for their clients. Here are some of the primary benefits for businesses:

• User experience enhancement
  White-label payfac services improve the customer experience by keeping payments fully embedded in your platform. Customers can complete transactions without leaving your product, which reduces friction, increases satisfaction, and supports stronger long-term retention.
  

• Accelerated time to market
  The traditional setup of a payments infrastructure is complex and time-consuming. By adopting a white-label payfac solution, you can drastically expedite your time to market. With the payfac provider taking care of the backend, you can focus on branding and integrating it with your platform, saving valuable time and resources.

• Fuller brand expression
  White-label payfac services let you offer payment processing under your own brand. This reinforces brand consistency, positions you as a more complete solution, and builds credibility across every customer touchpoint.

• Increased revenue streams
  The incorporation of a payment processing service can generate new streams of revenue. In addition to your primary services or products, you now possess a profitable facet to your business: transaction fees. With every processed transaction, you gain a fraction of the fee, diversifying and expanding your revenue sources.

• More bandwidth for core business functions
  White-label payfacs manage the difficult parts of the payment process, including risk management, compliance, and technical support. This frees up internal resources that you can use to focus on the primary revenue drivers and customer service.

• Simplified compliance and risk management
  Navigating the often shifting regulations of financial transactions can be a daunting task. A white-label payfac provider ensures that the payment processing adheres to all relevant industry standards and regulations, and handles risk assessment and management. This protects your business from potential fraud and disputes.

• Scalability
  White-label payfac services offer scalability to match the growth and expansion of your business. As your transaction volume increases, the payfac solution scales accordingly, providing consistent, reliable performance.

• Global reach
  With white-label payfac services, geographical boundaries become less of a constraint. These solutions often support multiple currencies and payment methods, enabling your business to tap into new markets and broaden your customer base.

White-label payfac services can allow businesses to revolutionize their payment processing capabilities, improve the customer experience, and explore new revenue opportunities, all while maintaining focus on their primary competencies. For businesses with the right needs, goals, and requirements, it’s a powerful tool.

How to choose a white-label payfac

Choosing a white-label payfac solution is an important decision that can significantly impact your business operations, customer experience, and overall growth. To ensure you select the solution that aligns with your business goals and requirements, consider the following factors:

• Integration and customization capabilities
  A key factor to consider is the ease of integration with your existing platform or system. The white-label payfac should blend into your existing platform without disrupting the user interface or experience. It should also offer ample customization options to align with your brand’s aesthetics and functionality requirements.

• Compliance and security
  The payfac solution should adhere to all relevant regulations and standards, including PCI DSS, Know Your Customer (KYC), and Anti-Money Laundering (AML) guidelines. Additionally, it should provide strong security measures, such as data encryption and fraud detection, to protect sensitive transactional data.

• Scalability
  As your business grows, your transaction volume will likely increase. Choose a white-label payfac solution that can scale alongside your business and handle a larger volume of transactions without performance issues.

• Support for multiple payment methods
  To cater to a diverse customer base, choose a solution that supports multiple payment methods, including different types of credit and debit cards, digital wallets, and bank transfers. This flexibility can enhance the customer experience and increase conversion rates.

• International transactions
  If your business operates globally or plans to expand globally in the future, ensure that the payfac solution you choose supports multiple currencies, can handle cross-border transactions, and, if applicable, can enable local acquiring. Any or all of these features can be key to operating in international customer markets.

• Transparent pricing
  Payfac providers have different pricing structures, such as a flat fee per transaction, a percentage of the transaction value, or a combination of both. Flat fees are often around $0.30, while percentage fees are typically around 2.9%. Understand the pricing structure clearly and calculate the cost implications for your business. Look for a provider that offers competitive rates and transparent pricing with no hidden fees.

• Reliable, trustworthy customer support
  A reliable payfac provider should offer robust customer support to answer your questions and assist you with any issues that may arise. Check the provider’s support channels—email, phone, live chat—and their availability. Ideally, they should offer 24/7 support. You should also look for reputable customer reviews and case studies to gauge the provider’s reliability, customer service quality, and overall performance

• Reporting and analytics
  A high-quality white-label payfac solution should offer comprehensive reporting and analytics features. These insights can help you track your transactions, identify trends, and make data-driven decisions to improve your business.

With all of these factors, make sure to consider the near-term and long-term needs and goals of your business. Your choice should meet your current needs and have the ability to adapt and scale with your business as it grows.

White-label payment facilitator requirements checklist

Here’s a quick checklist of what to pay attention to when choosing a white-label payfac solution.

• Business type (platform, marketplace, ISV)

• Currencies supported

• KYC/AML readiness

• Support capabilities

• Technical integration capacity

• Reporting and analytics features

• Performance track record

Each of these factors will impact your payment process, so make sure you understand how a payfac would handle them.

Stripe’s white-label payfac solution

Historically, establishing a payfac model required a substantial up front investment of time and money. Stripe offers a more efficient, technology-driven solution that simplifies the process and opens up additional revenue opportunities for businesses.

Stripe’s payfac solution allows businesses to fully embed not only payment services but also additional financial services into their software. This approach is valuable for platforms looking to enter the market swiftly, minimize setup costs, and expand their monetization potential.

Prominent platforms, including Lightspeed and Shopify, use Stripe’s solution to create a white-label payment experience, fully embedded within their platform. They provide added value services to their customers, such as point-of-sale payments, card issuing programs, fraud solutions, subscriptions, and financing options. Building on Stripe enables these platforms to deliver customized payment experiences to their customers and to monetize a range of products and financial services.

One of Stripe’s primary advantages is its API-first approach. This means that platforms can design the optimal experience for their customers, either by fully customizing the user experience or by using prebuilt UI components provided by Stripe.

Features that platforms can control include:

• Customizing the user experience: Platforms have the flexibility to design their payment interfaces to best suit their customers’ needs.

• Setting payout timing: Platforms can determine the frequency and timing of payouts to best manage their cash flow.

• Determining pricing and fees: Platforms can set their transaction fees, enabling them to control their revenue from payment processing.

• Managing complex money movement: Stripe’s solution simplifies the process of handling complex payment flows, making it easier for platforms to manage transactions.

• Integrating and unifying financial reporting: Stripe offers comprehensive financial reporting features, providing platforms with valuable insights into their payment activities.

• Scaling globally: With Stripe, platforms can operate internationally without needing to set up local bank accounts and company entities in each market. Stripe’s global infrastructure simplifies the process of accepting payments across different countries and currencies.

• Offering additional services: Platforms can expand their service offerings to include point-of-sale payments, invoicing, issuing payment cards, subscriptions, and lending.

Compared to payfacs, Stripe offers a ready-to-use solution that reduces operational overhead costs and accelerates your time to market. Stripe’s solution also shifts some of the compliance and regulatory burden away from your business, making it the easier and safer choice.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.

Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods, and Link, a wallet built by Stripe.
  
• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.
  
• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.
  
• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.
  

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.