If you run a software platform and your users accept payments, you’ve probably heard the term “PayFac,” short for payment facilitator.
You’ve probably also heard that becoming a PayFac is complex, expensive, and operationally demanding.
Both of those things are true.
What’s also true is there are several ways to embed payments into your platform without you becoming a registered PayFac. The challenge is the terminology isn’t always consistent, and understanding the nuances and differences matters more than most ISVs realize.
The basics: what a PayFac actually does
A payment facilitator is a company that’s registered with the card networks, including Visa and Mastercard, in conjunction with a sponsoring bank, to process payments on behalf of other businesses, often described as sub-merchants.
Instead of every sub-merchant needing its own merchant account with direct relationship with a processor, the PayFac brings them together under a single master merchant account.
This is the model that made companies like Square and Stripe possible. They act as the PayFac, or “master account” and every small business processing payments through them operates as a sub-merchant under their umbrella.
For software platforms and ISVs the value is straightforward. If payments run through your platform, you can have more control over the payments experience, earn revenue from every transaction, and let users pay and get paid without leaving your application.
How do you get there?
The problem: becoming a PayFac is a heavy lift
This is where software companies often hit a wall.
Registering as a payment facilitator (PayFac) means securing sponsorship from a registered bank, meeting PCI DSS requirements, building underwriting and KYC/KYB capabilities, managing fraud and risk, handling chargebacks and disputes, and maintaining ongoing regulatory compliance, not to mention front line support.
That’s a significant investment of time, money, and organizational focus. For most software companies, it also has very little to do with the product they actually build. You’re effectively getting into a new business.
That’s why most ISVs looking to embed payments don’t become registered PayFacs themselves. In fact, there was a study showing many ISVs regretted the decision to becoming a PayFac. Instead, when they could simply partner with a company that already has the payments infrastructure in place.
The next question becomes which model best fits your business.
Why the terminology gets confusing
If you’ve been researching embedded payments, you’ve probably noticed that the terminology isn’t always consistent.
Some providers use terms like Managed Payment Facilitation, managed PayFac, and PayFac-as-a-Service to describe the same type of offering. In that model, the provider is the registered PayFac, your merchants (your end-users) become sub-merchants under the provider’s registration, and the provider handles the compliance, underwriting, risk management, and regulatory responsibilities.
Other providers support a model where the ISV actually becomes the registered PayFac, and the provider supplies the technology and operational support to help make that possible. You’ll also hear this referred to as PayFac-in-a-Box. Beware this “box” may not have full instructions!
The terminology may vary, but the distinction is important because it changes what your company is responsible for.
The two approaches look like this:
Managed Payment Facilitation (often called Managed PayFac or PayFac-as-a-Service)
This is the model NUMBER provides.
Your merchants (end users) become sub-merchants under our PayFac registration while we handle compliance, underwriting, risk management, chargebacks, and the regulatory infrastructure behind the scenes.
Your team focuses on building great software and growing your core business. Our team works alongside yours through migration planning, engineering support, merchant onboarding, and long-term growth, without any significant economic sacrifice.
PayFac-in-a-Box
In a PayFac-in-a-Box model, your company becomes the registered PayFac. Sounds sexy, but like it or not you are entering a new business, with new business requirements.
The provider gives you the technology and operational support needed to get there, but your business owns the registration and takes responsibility for compliance, underwriting, risk management, and the operational infrastructure required to support it.
For some software companies, that’s the right long-term strategy. The decision ultimately comes down to how much of the payments operation your company wants to own.
Here’s a side-by-side look:
| Category | Managed Payment Facilitation (Managed PayFac / PayFac-as-a-Service) | PayFac-in-a-Box |
Who is the registered PayFac? | Your payments partner | Your software company |
Who manages compliance? | Your payments partner | Your software company |
Who handles underwriting? | Your payments partner | Your software company |
Who manages risk and chargebacks? | Your payments partner | Your software company |
Who maintains the regulatory infrastructure? | Your payments partner | Your software company |
| Your team’s role | Embed payments, own the user experience, and grow your payments program | Run your own payments program with the provider’s technology and operational support |
Level of operational responsibility | Lower | Higher |
| Best fit for | ISVs that want embedded payments, recurring revenue, and a managed partnership without becoming a regulated payments company | Larger ISVs that want maximum control and are prepared to operate as a regulated payments company |
What to look for in a Managed Payment Facilitation partner
Not every Managed Payment Facilitation provider approaches the relationship the same way. If you’re evaluating partners, here are a few things worth paying attention to.
Migration support beyond integration
Most ISVs aren’t starting from scratch. They already have a payments provider.
The real question isn’t, “How easy is it to integrate?”
It’s, “How easy is it to change?”
The best partners make the migration process structured, predictable, and low-disruption for both your company and your merchants. They don’t just help you connect payments. They help you move your existing payments program with confidence and no brain damage.
Speed to go-live
How quickly can your first merchants begin processing?
The right partner works alongside your engineering team to compress the timeline from months to weeks through structured onboarding, proven implementation processes, and hands-on technical support.
The sooner your merchants are processing payments on a highly efficiant platform, the sooner you can focus on what you do best.
Compliance coverage
Understand exactly what your provider is responsible for.
That includes PCI compliance, KYC/KYB underwriting, risk monitoring, chargeback management, and regulatory reporting.
One of the biggest advantages of Managed Payment Facilitation is that your team doesn’t have to become experts in any of those areas. Your partner should already be.
Revenue transparency
Understand exactly how the revenue-share model works.
How is it calculated?
When are payments made?
Does your share grow as merchant volume grows?
These are important questions, and a good partner should be able to answer them clearly from the beginning.
Long-term flexibility
The demands on your platform at 50 merchants won’t be the same as they will be at 500.
The right partner will grow alongside you without requiring you to re-platform, rebuild payments infrastructure, or rethink your strategy as you scale.
The payment volume is already yours to capture
The goal of Managed Payment Facilitation is simple: give software companies a practical way to have more control and own more of the value you created without becoming payments experts.
NUMBER provides Managed Payment Facilitation for software platforms across healthcare, senior living, field services, and other specialized verticals. We handle everything from compliance to risk infrastructure while working alongside your team, so you can stay focused on building great software while earning from every transaction.
If your platform already processes payments, but lacks true partnership, features or economic transparency, let’s talk.
