The traditional payment model — where merchants apply for merchant accounts through an ISO, wait days or weeks for approval, and manage a separate relationship with an acquirer — has been largely replaced by the Payment Facilitator (PayFac) model for most e-commerce businesses. Understanding how these models differ explains why signing up for Stripe takes minutes while traditional merchant accounts take weeks, and what that difference means for your business.
ConvesioPay operates on a PayFac model through Adyen’s infrastructure — fast onboarding, no separate merchant account required, built specifically for WooCommerce merchants. Get started →
1. What Is an ISO?
An Independent Sales Organization (ISO) is a company that resells payment processing services on behalf of acquiring banks. ISOs were the traditional route for merchants to get merchant accounts before the PayFac model existed.
How the ISO Model Works
- Merchant applies for a merchant account through an ISO
- ISO submits the application to an acquiring bank for underwriting
- Acquiring bank reviews the merchant’s business, risk profile, and financials
- If approved, the merchant receives a unique Merchant Identification Number (MID)
- Merchant processes transactions directly under their own MID
- ISO receives a residual commission from the acquiring bank for bringing the account
ISO Model Characteristics
- Longer onboarding (days to weeks)
- Direct relationship with the acquiring bank — merchant is responsible for their own compliance
- Each merchant has their own MID and bears their own liability
- More flexibility for high-risk or unusual business types
- Often used by larger merchants who want direct acquirer relationships and negotiated rates
2. What Is a Payment Facilitator (PayFac)?
A Payment Facilitator is a company that sponsors merchants under its own master merchant account. Instead of each merchant having their own relationship with the acquiring bank, the PayFac holds the master account and sub-merchants process under it.
How the PayFac Model Works
- Merchant signs up with the PayFac (Stripe, Square, PayPal, ConvesioPay)
- PayFac onboards the merchant as a sub-merchant under its own master MID
- PayFac completes rapid KYC/KYB (Know Your Customer/Business) verification — often automated
- Merchant can start processing within minutes to hours
- PayFac aggregates all sub-merchant transactions and is responsible for compliance
- PayFac takes on the risk of its sub-merchant portfolio
PayFac Model Characteristics
- Instant or near-instant onboarding
- No separate merchant account application
- Standardized pricing (often flat-rate for smaller merchants)
- PayFac bears compliance and fraud risk for sub-merchants
- Account can be terminated quickly if the sub-merchant violates terms — the reason for Stripe’s infamous account freezes
3. ISO vs. PayFac Comparison
| Factor | ISO Model | PayFac Model |
|---|---|---|
| Onboarding time | Days to weeks | Minutes to hours |
| Merchant account | Own dedicated MID | Sub-merchant under PayFac MID |
| Relationship | Direct with acquiring bank | With PayFac; indirect with acquirer |
| Pricing flexibility | Negotiable, especially at volume | Usually standardized (less negotiable) |
| Risk of sudden termination | Lower (direct bank relationship) | Higher (PayFac can terminate sub-merchant) |
| Compliance ownership | Merchant responsible | PayFac responsible |
| High-risk businesses | Often available through specialist ISOs | Often refused or terminated |
| Best for | Large merchants, high-risk, negotiated rates | SMBs, fast onboarding, standard businesses |
4. PayFac-as-a-Service
A newer model is PayFac-as-a-Service, where platforms and software companies become PayFacs themselves — embedding payment processing into their platform as a monetization layer. This is how platforms like Shopify Payments, WooCommerce Payments, and marketplace operators process payments.
Building a PayFac from scratch requires significant regulatory compliance, acquiring bank relationships, and capital. PayFac-as-a-Service providers (Stripe Connect, Adyen for Platforms, WePay) allow platforms to offer embedded payments without building the full infrastructure, taking a revenue share on payments processed through their platform.
5. What ConvesioPay’s Model Means for Merchants
ConvesioPay operates as a PayFac powered by Adyen’s acquiring infrastructure. For WooCommerce merchants, this means:
- Fast onboarding — no multi-week merchant account application process
- Direct Adyen access — Adyen’s global acquiring network, direct issuer connections, and network tokenization are available to ConvesioPay merchants without the enterprise requirements of a direct Adyen contract
- Interchange++ pricing — ConvesioPay passes interchange through at cost with a transparent markup, unlike flat-rate PayFacs (Stripe, Square) that bundle everything into one rate
- WooCommerce specialization — the PayFac model doesn’t mean standardized pricing or generic support; ConvesioPay’s specialization in WooCommerce means better integration and more relevant support than a generalist PayFac
For a full comparison of payment processor models, see Payment Gateway vs Payment Processor: What’s the Difference?. For ConvesioPay’s pricing structure, see Interchange Plus Pricing: Why Transparent Processing Saves You Money.
ConvesioPay combines PayFac simplicity with interchange++ transparency — fast onboarding, Adyen’s global infrastructure, and pricing that passes the savings of your actual card mix back to you. Get started →