Merchant Account vs Payment Facilitator (PayFac)

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This page is general information, not legal advice. It is current as of September 16, 2026, and summarizes the Visa Core Rules and Visa Product and Service Rules dated 18 April 2026. Mastercard, American Express and Discover have their own rules; we could not access Mastercard's rules document when we checked on September 16, 2026, so this page does not describe them. Card network rules change, and your own contract governs your account. CELER Merchants is an independent merchant services agent.

The parties, in Visa's words

Visa defines an acquirer as a member that signs a merchant or payment facilitator and directly or indirectly enters a transaction into interchange. A payment facilitator is an entity that contracts with an acquirer to deposit transactions, receive settlement from, or contract with an acquirer on behalf of a sponsored merchant. A sponsored merchant is an entity that contracts with a payment facilitator and, under that contract, is able to accept a card to sell goods or services. A marketplace is different again: an entity that brings cardholders and retailers together on a website or app and processes transactions and receives settlement on behalf of those retailers.

How the money moves

Visa's rules say an acquirer must pay or credit its merchant's, sponsored merchant's or payment facilitator's account promptly after a transaction is deposited, and that the payment must equal the transaction totals less credits, applicable discounts, disputes, other agreed fees or merchant reserve funds, where applicable. An acquirer may pay a payment facilitator on behalf of a sponsored merchant, or pay a sponsored merchant directly for its portion if the acquirer also contracts with the payment facilitator. If a payment facilitator receives the payment, Visa says it must pay or credit its sponsored merchant's account promptly after deposit. The timing and any reserve in practice come from your contract, so read the funding and reserve sections before you sign.

Who is liable for what

Under the Visa rules, a sponsored merchant is treated as a merchant of its payment facilitator's acquirer, and an acquirer that contracts with a payment facilitator is liable for all acts, omissions and other adverse conditions caused by the payment facilitator and its sponsored merchants. The agreement between the acquirer and the payment facilitator must state that the payment facilitator is liable for its sponsored merchants' acts, omissions and cardholder disputes, is financially liable for each transaction processed on their behalf, and must ensure its sponsored merchants comply with PCI DSS. Visa also requires the payment facilitator identifier and the sponsored merchant identifier in the authorization record.

The USD 1 million threshold

Visa's rules say an acquirer that contracts with a payment facilitator must enter into a direct merchant agreement with a sponsored merchant that exceeds USD 1 million in annual transaction volume: before processing any transactions for a sponsored merchant new to the payment facilitator, or within 2 years after an existing sponsored merchant's volume exceeds USD 1 million. The payment facilitator may keep providing payment services, including settlement. Visa lists exceptions, including where the payment facilitator has held the relationship for at least 2 years with the same acquirer, reports the merchant's volume, disputes and fraud to the acquirer, and the acquirer keeps overseeing the relationship, and for certain merchant category codes such as utilities, doctors, hospitals, schools and tax payments. Visa says it may amend these terms.

Merchant, sponsored merchant or something else?

Visa classifies an entity that deposits transactions, receives settlement and contracts with an acquirer or payment facilitator as a merchant or sponsored merchant if it sells the goods or services to the cardholder, uses its own name primarily to identify itself to the cardholder, and provides recourse to the cardholder in a dispute. Otherwise it may be a payment facilitator, marketplace, digital wallet operator or ramp provider. Visa says it may also look at whose name is on the receipt and who owns the goods, books the sale as revenue, and handles customer service and returns.

Questions to ask before you choose

1. Will I sign a merchant agreement with an acquirer, or am I a sponsored merchant of a payment facilitator? 2. Which acquirer sits behind the account? 3. When are funds paid out, and can a reserve or hold be applied? 4. How is pricing set: flat rate, tiered or interchange-plus? 5. What happens to my account, pricing and funding if my annual volume grows past USD 1 million? 6. If I leave, can my stored customer cards be migrated? 7. What name will customers see on their statements? Get the answers in writing, and read the termination and reserve clauses.