As a business owner, one of your main goals is to ensure that your payment processing is efficient and secure. With digital payments here to stay, finding the right payment processor for your business becomes a weighty responsibility.

Making the wrong choice about how to accept and process digital payments can result in lost revenue and unhappy customers. In this blog post, we’ll take a closer look at two payment processing options: payfac companies and payment processor companies. We’ll explore their differences, advantages, and disadvantages, so you can make an informed decision on which one is right for your business.

What Are Payfac and Payment Processors?

What is payfac?

Payment Facilitators (payfacs) are payment processing entities that work with businesses to facilitate payment transactions. Payfacs typically offer a bundled solution where they act as the merchant of record, meaning they are the party responsible for storing the transaction data and managing chargebacks and refunds. Payfacs enable businesses to quickly and easily get up and running and receive payments without needing to set up their own merchant account with a bank.

What is a payment processor?

Payment Processors are authorized entities that specialize in the processing of credit and debit card payments on behalf of a business. They are responsible for authorizing the transactions, verifying the funds are available, and processing the payment. Payment processors allow businesses to get paid in real-time, providing a secure and reliable payment gateway.

Payfac vs. Payment Processors

Payfac

The advantage of payfac is that it’s easy to set up and can be done online. This means you can start processing payments within a few hours.

With payfac, you also benefit from lower fees, as the payfac takes a percentage of the transaction fee. This is an excellent option if your business processes low-value transactions and has a high volume of sales.

One downside of payfac is that it’s more expensive for high-value transactions. This is because the payfac takes a percentage of the transaction fee, which can be higher for larger transactions.

Another disadvantage is that payfac has limited control over transaction disputes and chargebacks. This means that disputes and chargebacks can take longer to resolve, which can lead to lost revenue and unhappy customers.

Payment Processors

A payment processor offers the benefit of more control over transaction disputes and chargebacks. This is because you own your merchant account and can communicate directly with the bank. Payment processors also provide you with more options and features, such as customized reporting, fraud detection tools, and recurring billing.

The disadvantage of a payment processor is that it requires more paperwork and upfront fees. This can be challenging for small businesses or startups that don’t have a lot of resources. A payment processor has higher transaction fees, as you’re paying for your own merchant account. This can be challenging for businesses that process low-value transactions.

Choose the Best in Online Payment Processing

Choosing between payfac and a payment processor depends on the size and type of your business. Payfac is an excellent option for small businesses or startups that don’t have the funds or resources to set up their own payment processing system. Payment processing is an excellent option if you have the resources to set up your own merchant account and want more control over transactions, disputes, and chargebacks. Whichever option you choose, make sure you do your research and pick the one that aligns with your business goals and needs.

At Slidepay, we are a full service payment processor set up to enhance the customer experience and eliminate the friction of receiving payments. We cover all your payment needs so you can focus on growing your business with state of the art software and hardware that integrate seamlessly into your system. Get in touch with us to chat about how Slidepay can help your business process payments. We look forward to hearing from you!