Payment facilitator vs payment service provider: What You Need to Know

Payments have been the same for decades. Even though the methods have changed - cards and online stores instead of cash and storefronts - the technology really hasn't changed all that much. Customers use their cards at your business, money makes its way through the labyrinth of payment gateways, merchant accounts and banks before it gets to your account, sometimes days later. In the past seven years or so, however, payments have seen a revolution in speed, efficiency and, most importantly, the ease with which a business can get started.

One of the most consequential changes is the development and explosion of payment facilitators. A big change has been software companies owning and monetizing payments, and really becoming the payments company. The revenue is nice for the business, as opposed to none or a smaller rev-share from the provider. They also have the burden of assuming customer support. 

These companies are offering a frictionless, fast experience for both consumers and businesses. But what are they and how do they differ from traditional payment service providers? 

And if you want to fast track navigating the world of payment process, you can book a free consultation with a Swipesum expert today!

Defining our terms

Before we get too far let’s make sure we know what we’re talking about here. For decades, all payment processors have helped businesses get paid. Payment service providers work as the bridge between a customer’s bank and your merchant account. That bridge is also incredibly well protected with encryption and lots of in between processes to help keep the cash moving. When a customer slides their card or uses it online, the payment processor (or gateway in the case of online purchases) takes that information, encrypts it and sends it through the network to your merchant services account. Your account checks in with the customer’s bank, sees that there’s cash to cover the purchase, and approves it. The money then works its way to your account, usually in batches at the end of the day. The whole process from start to finish can take a few days. 

In essence, the payment service provider is set up and managed by the business to help them facilitate payments with customers.

Payment facilitators, however, operate a bit differently. Here, businesses partner with a platform that facilitates payments on their behalf, creating a subcontractor kind of relationship. Uber Eats or DoorDash are excellent examples of payment facilitators, along with any SaaS platform that wants to own payments, and provide access to an instant merchant account.. A restaurant partners with them and takes payments from customers. Then, the platform pays the restaurant, less a fee, as opposed to the customer. The difference here is subtle but very important. Payment facilitators are software companies that may have many different businesses as part of their overall service, all sub-accounts that they pay when someone purchases from that specific place. Sub-merchants using their software can have instant access to a merchant account to process payments within their software

Pros & Cons

pros and cons

Payment service providers are the traditional way payments are processed while facilitators are the new kids on the payments block. There are a few key pros and cons to using them.

Complexity & Opportunity

Setting up an account with a payment service provider can be a long, drawn out process that requires lots of steps. Additionally, keeping up with the technology provided by the service provider can be difficult as well. On the other hand, if you’re a larger business or want greater control over your payment processes, a payment service provider may be the answer. This is because unlike a facilitator, you’re granted your own ID and license to take payments. This allows you more freedom.

WIth a facilitator, you’re given a sub license under the vendor. This is far less complex and easier for smaller companies.


Payment service providers can be expensive to set up. However, once they are set, you can generally expect lower fees especially if you process more transactions. Payment facilitator fees tend to be higher per transaction but the ease of it already being integrated into the software you're using, including the easy setup, can make it far more affordable for smaller businesses.

Facilitators also often come with upfront pricing in tiers, which we call flat rate pricing. Payment service providers often charge various fees for various things, including things that may be out of your control during the payment process. Their fees might end up being a bit lower, but you’ll pay for that in some cases. Payment Processors typically price on the interchange plus model which can be more transparent and offers cost-saving opportunities for merchants.

Customer Access

You’re not really gaining or losing anything by going with a payment service provider but if you’re working with a facilitator you may definitely see a boost in sales. This is because your business will be present on the platform that customers are using. It’s a one-stop-shop. There’s no need for the customer to download your app or visit your website. Think about it: you’re browsing for something to eat. Are you more likely to open up the app that lists hundreds of restaurants in your area and allows you to order super fast, or are you going to pop around on Google trying to find a restaurant nearby, then calling them to place an order? Right.


The word that makes every business owner shiver. Because payment facilitators are the main account associated with the payment, they are required to maintain compliance with data security and privacy regulations like SOC and PCI-DSS. The merchant is not responsible. However, if you develop your own relationship with a payment service provider, you could bear some of the responsibility; unless you’re prepared with a compliance staff and dedicated IT security folks, you might not want to get involved in that.


Because payment facilitators take care of the actual ID and licensing, then subcontract their services out to businesses, there is a far less stringent underwriting requirement for your business, and you can have instant access to a merchant account. If you get started with a payment services provider, the license is under your name, making the bar much higher. If you’re a new business that can be a pretty big lift.

The differences between a payment facilitator and a payment service provider seem stark but in reality, each one is perfect for a certain kind of business. If you’re running a small business that handles a small number of transactions with limited staff, you might lean toward using a payment facilitator. If you’re a larger business who can handle the initial upfront cost, a payment service provider might be a better choice. As always, Swipesum can help you decide what’s best for your business and take a look at your current setup to find dollars you’re missing.

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Michael Seaman

Michael Seaman

Michael is the co-founder and CEO of Swipesum. A veteran of the payments industry, Michael and his brother Stephen have led Swipesum since its inception in 2016. In his free time, Michael enjoyes time with his three children.

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