Payment Processor vs Payment Facilitator

While payment processors handle the technical movement of funds, payment facilitators offer a full-stack solution that includes onboarding, compliance, and fund orchestration.

In the world of digital payments, the terms Payment Processor and Payment Facilitator (PayFac) are often used interchangeably—but they refer to very different roles in the payment ecosystem. Understanding the distinction is key for any software company looking to embed financial services into their platform.

This article breaks down the key differences and explains why software platforms benefit from working with a PayFac like VoPay to embed payments more efficiently and effectively.

What Is a Payment Processor?

A Payment Processor is the behind-the-scenes infrastructure that handles the technical flow of payment transactions—moving funds between a customer’s bank and the merchant’s bank.

They:

1. Route payment details between parties
2. Authorize and settle transactions
3. Integrate with payment gateways and card networks
4. Provide security and encryption protocols

Examples include companies like Chase Paymentech, Global Payments, and Elavon. But processors typically require each business to become a registered merchant and manage their own compliance, underwriting, and integration.

What Is a Payment Facilitator (PayFac)?

A Payment Facilitator sits on top of the payment processor and handles many of the complexities required to launch and manage payment services.​

Instead of each customer being onboarded as a standalone merchant, the PayFac operates under a master merchant account, allowing software platforms to onboard sub-merchants quickly and handle payments at scale.

They provide:

1. Instant merchant onboarding (KYC/KYB)
2. Multi-rail payment support (ACH, EFT, Interac e-Transfer®, credit card)
3. Built-in compliance, risk, and fraud management
4. Fund flow orchestration and real-time ledgering
5. Reporting, reconciliation, and payout infrastructure

Key Differences at a Glance

Why This Matters for Software Platforms

If you’re a software platform or ISV looking to embed payments, partnering with a Payment Facilitator gives you faster time to market, less regulatory overhead, and new revenue opportunities—without needing to build or manage a full payment stack.

While processors are essential to the infrastructure, working directly with one typically means more development effort, slower onboarding, and a higher compliance burden.

How VoPay Combines the Best of Both Worlds

VoPay acts as a Payment Facilitator with direct processor integrations, giving software companies the ability to offer embedded payments, digital wallets, automated reconciliation, and compliant onboarding through a single API.

We manage the complexity—so you can focus on building a better product.