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Four Advantages of Payment Facilitation

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Last editedFeb 20232 min read

Today’s technology ensures that businesses have plenty of options when it comes to taking online payments. While some business owners open their own merchant accounts, others use third-party payment facilitators. Both offer advantages, so which is right for you? In this guide, we’ll focus on payment facilitation along with its major benefits.

What is a facilitation payment?

Credit and debit card payments are convenient for customers, but they come with a distinct set of rules for businesses. This often includes the need for a merchant account to hold funds until they’re settled with the bank or payment processor. Applying for a merchant account can be a costly and time-consuming process, particularly for small businesses.

Facilitation payments offer a more convenient alternative using third-party infrastructure. When businesses sign up with a payment facilitator or PayFac, they’re assigned a sub-merchant ID managed by the facilitator. This enables a much faster set-up for smooth, easy onboarding. The payment facilitator takes on the risk associated with processing card payments, with the infrastructure and compliance measures already in place.

Advantages of facilitation payments

There are several benefits to using payment facilitation services, from a faster sign-up process to reduced processing costs. Compared to setting up a merchant account, small businesses will find it far more convenient. Here are the four primary advantages of facilitation payments to consider.

1. Faster onboarding process

To set up a merchant account, you’ll need to fill out extensive paperwork and wait several weeks for approval. With payment facilitation services, set-up is typically fast and easy. Most let you start accepting payments immediately once approved. You’ll only need to fill out a form to qualify as a sub-merchant.

2. Reduced risk of fraudulent activity

Payment facilitation reduces overall risk to your business. This includes the risk of fraudulent card activity, chargebacks, and other troublesome issues. Payment facilitators use a continual underwriting process sparked by each transaction for added protection. If chargebacks do occur, it’s the PayFac’s responsibility to submit evidence to card networks. By contrast, if you process your own card payments in-house, you’ll need to gather and submit this evidence yourself.

3. Lower cost to the merchant

With less risk of chargebacks, you’ll reduce the cost of chargeback fees. Facilitation payments cost less than other types of payment processing, as you’ll typically only be charged for each transaction. Other types of payment processors sometimes charge per-transaction fees on top of monthly service fees. For small businesses with low transaction volumes, this means that payment facilitators cost less.

4. Compliance is left to the facilitator

Finally, you’ll have less of a headache when it comes to payment compliance. There are fewer compliance rules for businesses who sign up with a PayFac, with most handled by the facilitator. They’ll take care of tokenization and other security features for full KYC and PCI compliance. This not only keeps your customers’ card details safe, but also helps you save time on tedious compliance admin.

How to choose a payment facilitator in Australia

To make the most of the advantages mentioned above, you’ll need to choose from the best Australian payment facilitators. Get started by looking at the onboarding process and application requirements. This should be a streamlined, simplistic process. It’s also important to compare fee structures. The best PayFacs will only charge you per transaction, without added processing fees. Finally, make sure that your facilitator is fully PCI compliant to ensure your customer data is adequately protected.

There’s a lot to remember when it comes to accepting card payments. GoCardless offers an alternative allowing businesses to collect payment directly from customer bank accounts instead. Cut out the middleman with this pull-based BECS direct debit system, for lower transaction costs and fast, easy onboarding.

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