Merchant Account vs Payment Facilitator: What's the Difference?

A payment facilitator is a company that a bank (the acquirer) lets sign up other businesses to accept cards. Visa's rules call those businesses sponsored merchants. The payfac signs the contract with you, sets your price, receives the money from the bank and pays you out.

You'll also hear the older word aggregator. The idea is the same: many small sellers grouped under one master account.

The key point is ownership. With a payfac, the relationship with the bank belongs to the payfac, not to you. You have an account on the payfac's platform, and the payfac decides whether you stay on it.

With a merchant account, the bank has approved your business directly. That's the account START sets up, with Authorize.Net or Cybersource as the gateway that connects it to your website.

If you run a software platform and are weighing whether to become a payfac yourself, there are lighter ways to earn from your users' payments. Our guide to ISO vs agent vs referral partner compares them.

People mix these up because you often sign up for both at once. They do different jobs:

• Payment gateway: the software that takes the card details from your checkout, virtual terminal or invoice and sends them on for approval. It answers "approved" or "declined" in seconds. Authorize.Net and Cybersource are gateways.
• Merchant account: the bank account relationship that lets you accept cards at all. The acquiring bank approves your business, deposits your sales and handles chargebacks (disputes a cardholder files with their bank).

A gateway on its own can't pay you. It needs a merchant account behind it. A payfac bundles both into one sign-up, which is why the two are easy to confuse. For the gateway side in more detail, see whether Authorize.Net is a merchant account.

This is where START fits. Authorize.Net and Cybersource refer merchants to START. START shops the right merchant account (acquiring bank) for your business, underwrites it and sends the account details back to the gateway so it's connected.

The processor is the company that carries each transaction between the card networks (Visa, Mastercard and others), the bank that issued the card and your acquiring bank. It also runs the nightly settlement that turns approved sales into deposits.

Here's how the parts fit together, and where a payfac sits:

With your own merchant account, each of those parts is set up for your business by name. START is a registered MSP/ISO of Elavon. It shops the right acquiring bank for your business and connects the account to the gateway you choose: Authorize.Net or Cybersource.

Underwriting is the review a bank does to decide whether it will take on the risk of your card sales. The two models do it at different times.

• Payfac: sign-up asks for basic details, and you can usually start taking payments soon after. The platform keeps watching your sales, often with automated checks. If it later finds something it doesn't accept, such as a restricted product or a spike in disputes, it can hold funds or close the account.
• Merchant account: an underwriter looks at your business, products, website and processing history before approval. Underwriters usually ask for a voided check, ID for the owners, recent processing statements if you have them, and a website that shows your products, prices and policies.

The up-front review takes days instead of minutes. In return, the bank has approved what you actually sell, so there's less for anyone to discover later. Most START merchants are approved in 1–5 business days, and the Authorize.Net gateway is usually set up within 24 business hours of approval.

Our guide on how to get a merchant account walks through the application step by step. If your site isn't ready yet, start with the website requirements for accepting credit cards.

Whoever pays you out is also on the hook if a customer disputes a charge and you can't cover the refund. That's why holds and reserves exist. A reserve is money set aside from your sales to cover future refunds and chargebacks.

With a payfac, the payfac holds your money between the sale and your payout, and its terms decide when it can keep it. Here is what three of the largest payment apps' own agreements say, as of September 2026:

Each platform words this differently, so read your own agreement rather than assuming one rule covers all of them. If an account has already been closed, our guide for businesses shut down by a payment app covers getting held funds released.

A merchant account can carry a reserve too, especially for higher-risk businesses. The difference is timing: it's usually discussed and written into your agreement before you start, not added after you've been selling for months. Ask any provider to put reserve terms in writing up front.

Visa's own rules draw a line on how large a sponsored merchant can grow under a payfac. Visa Rules section 5.3.1.4 (ID# 0026435; April 18, 2026 edition, last updated October 2025) says the bank behind a payfac must sign a direct merchant agreement with any sponsored merchant that exceeds USD 1 million in annual Visa transaction volume:

• New to the payfac: before processing any transactions.
• Already with the payfac: within 2 years after its annual volume passes USD 1 million.

The payfac can keep providing its services, including settlement, after that direct agreement is signed. The bank doesn't need a direct agreement if either of these applies:

• The payfac has served the merchant for at least 2 years with the same bank, reports the merchant's volume, disputes and fraud to the bank, and the bank keeps overseeing the relationship.
• The merchant is in one of the listed categories, such as utilities, rentals, doctors, hospitals, schools and colleges, tax payments, court costs and fines.

These exceptions don't apply if the bank, the payfac or the merchant has been in a Visa risk program in the previous 3 years. Visa also says it can change the terms, including the USD 1 million limit.

In practice, the network expects a growing business to have its own agreement with a bank. Getting there on your own terms means a merchant account in your name. START sets that up and connects it to Authorize.Net or Cybersource.

Payfacs usually charge one flat rate: a percentage plus a per-transaction fee, the same for most cards. It's easy to read. But one rate has to cover the more expensive cards too, so on everyday debit and basic credit cards you can pay well above what the card actually costs. And the rate doesn't fall as your volume grows.

Merchant accounts are often priced interchange-plus: the card network's actual cost (interchange plus network fees) passed through, plus a fixed markup from your provider. When a card costs less, you pay less.

START prices merchant accounts on interchange-plus, passes through the lower Durbin-regulated debit fees and charges no termination, annual or address verification (AVS) fees. Our guide to interchange-plus pricing works through real 2026 Visa rates. For fee-by-fee numbers from the big apps, see our page comparing Authorize.Net with Stripe, PayPal and Square.

Moving from a payfac to a merchant account is mostly paperwork and a checkout change. Here's what's different afterwards:

• The account is in your name. The bank has approved your business, products and website as they are.
• Terms are set up front. Pricing, and any reserve, are agreed before you process.
• Your statement shows the real costs. On interchange-plus, you can see what the card networks charge and what your provider adds.
• You pick the gateway. Authorize.Net connects to a wide range of shopping carts and billing systems; Cybersource is Visa's enterprise gateway. Either sits on top of the same merchant account.
• You have a provider to call. START is based in Salt Lake City and answers at 888-573-7587, Monday to Friday, 9 to 5 Mountain Time.

Plan the switch so you don't have a gap. Keep the old account open until the new one is approved and a test payment has gone through. If you save cards for repeat billing, ask your current platform how it exports stored card data before you start. Our guide to switching merchant services covers the steps.

Not sure what your current setup really costs? Send us a recent statement for a free rate review. Merchants save 20% on average.