Two of the most common paths to providing payment acceptance — becoming a Payment Facilitator (PayFac) or becoming an Independent Sales Organization (ISO) — are often confused. They serve different purposes, carry different risk profiles, and suit different business models. This comparison helps platforms and businesses understand which path makes sense.
What Is an ISO?
An Independent Sales Organization resells merchant acquiring services on behalf of a bank or acquirer. ISOs don’t hold funds, don’t own the merchant accounts, and typically don’t take on underwriting risk. Their role is primarily sales and merchant services — they earn a revenue share or residual on each merchant account they originate.
PayFac vs. ISO: Head-to-Head Comparison
| Factor | PayFac | ISO |
|---|---|---|
| Merchant account | Sub-merchant under PayFac master | Individual account per merchant |
| Onboarding time | Minutes to hours | Days to weeks |
| Risk ownership | PayFac owns risk | Acquirer owns risk |
| Revenue model | Processing spread | Revenue share/residuals |
| Capital requirements | High ($1M+ reserves) | Low to moderate |
| Technology burden | Must build payment stack | Resells existing infrastructure |
| Registration complexity | High (12–18 months) | Moderate (3–6 months) |
| Revenue per merchant | Higher (full spread) | Lower (residual share) |
When the PayFac Model Makes Sense
The PayFac model is best suited for software platforms or marketplaces with large numbers of merchants where fast onboarding matters, significant transaction volume that justifies the infrastructure investment, and the engineering resources to build and maintain a compliant payments stack.
When the ISO Model Makes Sense
The ISO model works well for businesses that want to earn residuals from merchant referrals without taking on underwriting risk, don’t have the capital or technology for PayFac registration, and primarily serve merchants that benefit from dedicated individual accounts with full underwriting.
The Third Option: Use an Existing PayFac
For most businesses — WooCommerce merchants, agencies, and platform operators — neither building a PayFac nor becoming an ISO is the right move. Partnering with ConvesioPay gives you the benefits of PayFac economics (fast onboarding, integrated checkout, competitive rates at 2.9% + $0.30) without the capital burden or compliance complexity of either path.
Ready to get started? Learn more about ConvesioPay or view pricing.