Difference Between a Payment Facilitator vs Payment Gateway vs Merchant Account?

We are all aware that one industry that has experienced the direct effects of quarantine is the banking sector. Payments needed to move online, and banking services needed to adapt, if at all feasible, to the new situation.

It’s crucial to keep in mind that each physical payment system and electronic payment system has different policies and rules while working with them. It may occasionally be a straightforward process or a challenging one.

What is a Payment Facilitator?

An alternative to the conventional merchant service provider is a payment facilitator. Operating on a sub-merchant system is the PayFac( PAYment FACilitator) model. Therefore, retailers are not required to have their own MID (Merchant Identification Number). The concept makes it simpler to open an account and permits businesses to receive payments through the master MID account. 

Banks relate PayFacs to FinTech companies that operate a single sub-merchant platform and handle transaction processing.

Some people see this choice as an advancement over the long-running payment options on the market. According to another description of PayFacs, most of them operate as SaaS companies. That method also works. The approach enables payment acceptance through a sub-merchant platform and offers merchants a white-label payment processing solution. 

Why did the need for Payment Facilitators arise?

The industry has developed a new solution as a result of the difficulty in signing up with significant payment service providers. The payment facilitator accelerates the onboarding procedure more and more. Additionally, it is simpler for a business to begin receiving payments.

Therefore, merchants must supply seven to eight critical data elements to begin working with the facilitator. A unique underwriting algorithm checks them after that. The system accepts the application if the data complies with the specifications. It also performs it in real time. 

Key Features of Payment Facilitators

1. Funding

Paying out the income the sub-merchant has made is a part of this function. Naturally, this function calls for the facilitators to pay closer attention to fraud and the law. However, they can give the sub-merchants a better experience and have more financial control. 

2. Cross-checking

The facilitators adhere to Know Your Client (KYC) standards first and foremost. The facilitator confirms that the business is who it says it is. Then it confirms that the business has no connection to terrorism or crime or any prohibited business category. Thanks to the cutting-edge technology they employ. The tests are automated by the software, and any questionable activity is flagged.

3. Monitoring

After the seller joins the sub-merchant account, PayFac continues to be in charge of keeping track of the transactions. It ensures that they adhere to rules set forth by the government and card networks. The risk management department will get the transaction from PayFac for further examination if it appears suspicious. 

4. Chargeback management

In addition to other monitoring duties, PayFacs is in charge of chargeback management. Together with the acquiring bank, they manage the entire procedure. In order to conduct an investigation, legal documentation must be provided by the payment facilitator. 

What is a Payment Gateway? 

The front-end technology transmits consumer data to the merchant-acquiring bank, where the transaction is then processed and is known as the online payment gateway. It is a crucial part of the electronic payment processing system.

In other words, Payment gateways are the point-of-sale (POS) terminals used in physical stores to take credit card data from customers using a card or a smartphone.

Payment gateways are the “checkout” portals used in online retailers where customers submit credit card data or login credentials for services like NTT DATA Payment Services.

Benefits of Payment Gateways

1. Save time

Card payments can be received quickly via payment gateways. After setting up your payment gateway, you can typically start receiving payments within 24 hours. This process is far faster than manual processing.

2. Customer experience

Through payment channels, further features are accessible to improve the real-time user experience. Typically, customers can add products straight to their carts, and save bundles and favorite items. To enable one-click immediate transactions, users can quickly create a profile and securely store their payment information.

3. Enlarge your customer network

Using a payment gateway can allow your business to enter a new market. International customers may easily access your store and do secure transactions. In order to attract and retain customers, especially when operating an online store, secure digital payment options are becoming increasingly important. Thanks to developments like payment gateways, which allow customers to look for the best or cheapest items wherever they are, people are feeling more at ease making online purchases.

4. Reputable transactions

To protect the data, every single transaction that goes via a payment gateway is highly encrypted. Through secure payment procedures, consumers and organizations are safeguarded against potential fraud.

What is a Merchant account?

A merchant account serves as a middleman to enable your business to accept debit and credit card payments through both offline and online modes. If a payment processing solution sets up a merchant account for your business, you could be able to start accepting credit and debit card payments right away.

A bank account where the funds from credit and debit card transactions are deposited is known as a merchant account. Additionally, within 3 to 5 working days, your merchant account provider transfers the money to your company’s bank account. The same-day transfer of payments is a concept developed by some payment solution providers. 

Benefits of a Merchant Account

1. Boosting revenue

Most adult consumers use credit or debit cards, which eliminates the need to carry cash. The ability to accept and process various popular credit and debit cards can help your business grow sales as clients are more inclined to use their credit cards for huge impulsive purchases. 

2. Boost cash flow

Financing will take 1-2 days while validating and authorizing a card takes no time and takes place immediately. If you only invoice your clients and wait to get paid by cheque, this isn’t always the case.

3. Higher client satisfaction 

Today’s consumers need flexibility and value it more than anything. By providing them with a range of payment alternatives, including credit cards, debit cards, gift cards, cheques, and cash, you give your customers complete power over their monetary decisions. Give your customers the flexibility and freedom they want to keep them satisfied. 

Take your Business Online to Accept Payments

You can send out invoices, accept credit, debit, and e-cheque payments online, set up recurring billing, and carry your business with you wherever you go if you have a safe and secured merchant process provider. 

Merchant Account	Payment Gateway	Payment Facilitator
A merchant account is the bank account that a business uses to make commercial transactions,	A payment gateway is a technology that authorizes payments between merchants or vendors	The business that offers the infrastructure required for its sub-merchants to start accepting credit card payments is known as the payment facilitator.

About NTT DATA Payment Services

NTT DATA Payment Services India never ceases to astound with its secure and seamless digital payment solutions across multiple industrial and financial sectors worldwide. NTT DATA Payment Services India serves more than 6 million merchants with an annual transaction value and volume totaling INR 1.4 lac crores and 100 million.

By utilizing the best online payment service provider in India, which accepts payments by UPI, Links, Bharat QR, EMI, Net Banking, IMPS, and Credit and Debit Cards, among other methods, and is integrated with more than 50 banks and 100 different payment options, you may accelerate the growth of your business. Its extensive feature set is designed to assist both new and experienced businesses in boosting revenue, lowering risks, and safeguarding customer information.

Why NTT DATA Payment Services?

• Multiple payment options
• Easy retry option
• Multibank EMI 
• Invoice Payment
• Value Added Services
• Payouts
• Comprehensive Merchant Dashboard
• Round-the-clock support
• Instant and Split Settlement

Takeaway

You should now be able to distinguish between a payment facilitator, payment gateway, and merchant account from this article. It could come out as intimidating or simple. The security of transactions and client satisfaction, however, should be prioritized. Based on your needs, you can decide which one to select. Learn more about the services offered by NTT DATA Payment Services. 

FAQs

1. Is a merchant account free?

For standard banking services, some providers charge almost nothing, while others only allow a certain amount of free transactions before fees apply. 

2. Can I create my own merchant account?

Getting a merchant account requires that you make your website ready (as long as you run an online business). Make sure it meets all Visa and MasterCard regulations by going through it. A Payment Service Provider can assist you at this point if you employ their services. 

3. What is the difference between a merchant account and a business account?

The main difference between a merchant account and a business bank account is that the first one lets you control credit card transactions, while the latter lets you control all of your money.