What separates a PayFac from a laundering arrangement
| Dimension | Registered PayFac | Unregistered arrangement |
|---|---|---|
| Network registration | Registered and sponsored | None |
| Sub-merchant underwriting | Performed and documented | Not performed |
| Liability | Assumed contractually | Undefined until something breaks |
| Visibility to the network | Sub-merchants identified | Sales appear as someone else’s |
Why it matters to a supplier
A supplier that offers to “handle payments” for its buyers is describing either a referral relationship or a facilitator relationship. The first is ordinary commerce. The second requires registration. There is no informal middle option, and treating one as the other is where suppliers and their clients both get terminated.