Short answer
A company that onboards other businesses as sub-merchants under its own master merchant account, so they can take card payments without their own processor contract.
Stripe itself works this way for most of its users. Software platforms and marketplaces can also become payfacs, or use a “payfac-as-a-service” provider, to earn revenue from their customers’ payments and control the onboarding experience. In return they take on underwriting, risk and compliance work.
For platforms comparing Stripe Connect with these options, see payment costs for software platforms and marketplaces.
Part of our guide to payment costs for platforms.
Related terms
- Merchant of record (MoR): The legal seller in a transaction: the company responsible for taking the payment, charging sales tax or VAT, handling refunds and answering chargebacks.