Pay Theory Blog
December 14, 2023

The Payment Facilitation Model and Its Benefits: Why PFAC?

In the world of payments, there’s been a transformative shift in recent years with the emergence of innovative models like Payment Facilitation (referred to as PFAC or PayFac) gaining significant traction. This model is reshaping the way businesses handle payment acceptance, offering a range of benefits that contribute to operational efficiency, customer satisfaction, and overall business growth.

Below, we outline the 5 core advantages of the PFAC model and highlight its impact on businesses across various industries.

1. More Revenue

As a Payment Facilitator, your company recognizes gross transaction processing revenue as a new stream of revenue. This allows you to participate in the transaction revenue already crossing your platform. The impact on your company’s total addressable market (TAM) can be astonishing. For example, Toast’s payments TAM is 3.5x the size of its software TAM. MindBody increased their TAM by 41% with the addition of payments to their software platform.

“If vertical SaaS companies can now layer a massive and incredibly high margin payments revenue on top of their SaaS revenue, then many vertical SaaS businesses that operate in deceptively small TAMs become potential mega-opportunities simply by offering payments processing on top of their SaaS. This is a powerful business model shift and one that has shown early signs of viability given the success and scale already achieved by the handful of companies currently deploying this model.” 
—Adeyemi ("Ade") Ajao, Base 10 Partners

2. Streamlined Onboarding Process

One of the key advantages of the PFAC model is its ability to streamline the onboarding process for businesses. Unless you work with a premium payment partner like Pay Theory, a standard payment processing model may involve a complex and time-consuming application process for merchants. PFACs simplify this by offering a more straightforward onboarding experience. This facilitates quicker access to payment processing services, allowing Merchants to start accepting payments promptly. It’s also a faster time to revenue for the parent SaaS platform.

3. Build Better User Experiences

The PFAC model contributes significantly to an enhanced user experience for your merchants and customers. With simplified onboarding and integrated payment solutions, businesses can offer a seamless and user-friendly payment experience. This leads to increased customer satisfaction and loyalty. For consumers, the convenience of quick and secure transactions translates into a positive perception of the business, fostering trust and encouraging repeat business.

4. Agile and Scalable Solutions

As businesses grow, their payment processing requirements change. The PFAC model is designed to accommodate this scalability. Whether a business is expanding its product offerings, entering new markets, or experiencing rapid growth, the PFAC model ensures that the payment infrastructure can easily adapt to these changes. This flexibility is particularly valuable in the dynamic and competitive landscape of e-commerce.

5. Risk Mitigation and Compliance

PFACs play a crucial role in risk mitigation and compliance within the payment ecosystem. By assuming the role of the master merchant, PFACs take on the responsibility of underwriting and monitoring sub-merchants. This centralized approach allows for more effective risk management, fraud prevention, and compliance with industry regulations. As a result, businesses operating under the PFAC model can benefit from reduced exposure to financial risks and ensure that their payment processes align with relevant legal and security standards.

6. Faster Access to Funds

Traditional payment processing models often involve delays in fund settlements, causing frustration for merchants waiting for their revenue. Payment Facilitation accelerates the funds settlement process, allowing merchants to access their funds more quickly. This improved cash flow can be especially crucial for small businesses with tight budgets, enabling them to reinvest in their operations, cover expenses, and seize new opportunities.

How does your business take advantage of Payment Facilitation? Well, that depends on how much of a “payments” company you want to become.

Crawl. Walk. Run.

Pay Theory’s Unique Approach to Payment Facilitation

Full Payment Facilitation has some big benefits, but it also brings some new challenges with it. For most companies considering PFAC, the biggest of these challenges is handling merchant risk and underwriting. But there are multiple “steps” along the path to full Payment Facilitation. When you work with us, we help you figure out what you need and set up your Payment Facilitation instance to fit your business model.  

Our “crawl, walk, run” approach to payment facilitation is unique and helps your business sort out how best to implement PFAC for maximum benefit. Below is a brief breakdown of the differences:


  • Claim Your Revenue and Improve UX
  • Create the foundation to offer and monetize payment services to commercial clients with Pay Theory acting as the PFAC for you.


  • Advance Your Brand
  • Continue to drive net revenue, build out your merchant services, and leverage existing underwriting and compliance resources as you transition to a Full PFAC with Pay Theory’s expert guidance.


  • Control Your Destiny
  • Expand the product to full PFAC status and get the most return from core competencies like risk & compliance, DDAs, and existing relationships.

Bottom line, Payment Facilitation is a “must consider” for any SaaS company or Financial Institution that is serving SaaS companies. To learn more, reach out to us!

Sources Referenced