Payment facilitation as a service (PayFac-as-a-Service or PFaaS) offers new opportunities for acquirers, payment facilitators, and independent software vendors (ISVs) in the payment landscape. Exploring this topic in greater depth, global payments goliath, Mastercard has published a new whitepaper: ‘The future of payment facilitation: The rise of PayFac as a Service’.
PFaaS platforms are not just a trend but a fundamental shift in how the payment industry operates. They push traditional payment processors to innovate, enhance the merchant experience and empower ISVs to become key players in the payment ecosystem. As the technology matures and adoption increases, PFaaS is poised to play a central role in shaping the future of digital payments and embedded finance.
Commenting on the whitepaper, Jennifer Marriner, EVP, Acceptance Solutions, Mastercard said: “This white paper illuminates the strategic advantages and operational efficiencies that PFaaS brings to the small and medium enterprises (SME) payments ecosystem, positioning them as critical enablers for growth, scale, and innovation. Mastercard is dedicated to supporting and empowering the payment acceptance community, including acquirers, PayFacs, and ISVs, and acknowledges the game-changing impact that PFaaS provides.
“We are optimistic about the opportunities and fast-paced scale they offer. These insights offer a strategic roadmap for collaboration and growth within this dynamic environment.
Benefits of PFaaS
According to the report, 65 per cent of ISVs and marketplaces that do not offer payment acceptance functionality plan to do so in the future. However, this is a costly procedure – PFaaS simplifies the complex process of becoming a PayFac. It allows ISVs to offer integrated payment solutions quickly and cost-effectively.
This approach can collapse the time to market for new PayFacs. Typically, it has taken 12-24 months for an organisation to become a PayFac, having to go through an arduous process of researching application processes, technical development, establishing a compliance framework and operational setup. Then and only then, can tests start to take place as firms obtain necessary licences.
With PFaaS, this process is significantly cut down. Furthermore, it reduces merchant onboarding time from weeks to minutes, enhancing user experience and accelerating platform time-to-revenue. Other benefits of PFaaS platforms include capabilities to handle the regulatory compliance and risk management burden. In turn, this lowers the risk for new PayFacs and their sponsor acquirers.
he market for PFaaS is also growing rapidly, with several key players emerging and offering increasingly sophisticated solutions.
The future for PFaaS looks promising, with predictions of continued growth of the PayFac model, hundreds of new PayFac formations a quarter, their expansion into new verticals, and further innovation in risk assessment and fraud prevention.
