Payment Facilitator vs Payment Gateway vs Payment Processor

A payment gateway captures card data at checkout. A processor then moves that transaction between banks, while a payment facilitator onboards sellers under one shared master account.

Marketplace operators often use these terms interchangeably, though each covers a distinct part of the payment chain. Getting this right shapes compliance, onboarding speed, and how fast a platform can add sellers in 2026.

What is a payment gateway

A payment gateway captures card data at checkout, encrypts it, and sends it to the processor for authorisation. It is the entry point for every card transaction, though it does not move money or decide where funds go.

The gateway also starts the authorisation chain linking the buyer's bank to the acquiring bank. This validates the transaction before any funds are committed.

For marketplaces, the gateway must do more than a standard checkout flow. It needs multi-party flows, split payment logic, and automated seller routing; a standard ecommerce gateway lacks this natively.

What is a payment processor

A payment processor is the technical intermediary between the card network and both banks in a transaction. These are the issuing bank, the customer's bank, and the acquiring bank, the merchant's bank.

It formats the authorisation request, routes it through Visa or Mastercard, and supports settlement. Processors are rarely visible to the merchant. Most operators instead interact with a payment service provider that already has the processing relationship built in.

What is a payment service provider (PSP)

A PSP bundles the gateway, processor, and acquiring bank relationship into one service. Instead of managing separate contracts with each layer, the merchant integrates once.

For marketplace operators, the PSP model matters because it consolidates operational complexity. What matters more is whether the PSP is built for multi-party transaction logic, rather than adapted from a single-merchant model.

What is a payment facilitator (PayFac)

A payment facilitator, or PayFac, holds a master merchant account with an acquiring bank. It onboards other businesses as sub-merchants beneath that one account, rather than each business holding its own merchant account.

The PayFac underwrites each sub-merchant, monitors transactions for risk, and carries liability for what they process. This is what separates a PayFac from a standard processor or gateway relationship, where the bank carries the risk instead.

A gateway and processor handle one transaction at a time. A payment facilitator handles the bank's relationship with many merchants at once.

PSP vs PayFac: where the distinction matters

A PSP provides payment services under its own licensing and banking relationships. The merchant is simply a customer of the PSP. A PayFac goes further: it takes on the sub-merchant relationship directly, rather than leaving each as a PSP customer.

For most UK and European marketplaces, the real question is not "PSP or PayFac". It is whether the provider holds its own FCA authorisation for this sub-merchant structure.

What is PayFac-as-a-service

PayFac-as-a-service lets a platform access full PayFac functionality through a third party that holds its own FCA licence. This includes sub-merchant onboarding, split payments, and branded payment flows, without the platform becoming a registered facilitator itself.

The provider holds the acquiring relationships and compliance obligations. The platform gets the commercial benefits of being a payment facilitator. It avoids the regulatory overhead of becoming one; this is the correct model for most growth-stage marketplaces.

Other terms marketplace operators need to know

Embedded payments are processing capabilities built directly into a platform. The payment experience then happens inside the operator's product, rather than redirecting to an external provider. This lets split payments, seller onboarding, and escrow work as native features rather than bolted-on integrations. A platform can embed payments through a whitelabel integration with an FCA-licensed provider. Building the capability independently is the alternative, and this requires FCA authorisation in its own right.

Split payments divide a single customer transaction between multiple recipients. These are typically the platform and one or more sellers, with fees deducted at the point of transaction. They are the operational backbone of any marketplace processing funds for third parties. Standard payment gateways do not offer this as a feature. Under PSD2, manually distributing funds after capture is not compliant for most marketplace models.

Escrow payments hold funds with a regulated third party until a set condition is met. This might be delivery of a service or the close of a dispute window. Escrow needs specific regulatory permissions, and platforms holding buyer funds without the right FCA authorisation take on significant regulatory exposure.

A merchant ID (MID) is a unique identifier assigned by an acquiring bank. It routes transactions and tracks activity for settlement and compliance. Under the PayFac model, sellers operate under the PayFac's master MID as sub-merchants. This is what enables fast onboarding, since no bank underwriting is required per seller.

Strong Customer Authentication (SCA) is a PSD2 requirement for electronic payments. It mandates at least two independent factors: something the customer knows, has, or is. It has applied in the UK since March 2022 via 3D Secure 2.0. Exemptions apply to transactions below €30 and to recurring payments authenticated at setup. For high-volume platforms, exemption routing built into checkout protects conversion without adding friction.

Payment orchestration sits above multiple PSPs and acquirers, routing transactions to the best provider by cost or approval odds. This improves authorisation rates and reduces dependency on any single provider. Orchestration becomes relevant once transaction volumes are high. It will matter even more as agentic commerce grows, since AI agents must navigate several payment protocols at once.

PSD2, the Payment Services Directive 2, governs how payment services are authorised and secured across the UK and Europe. Key obligations for marketplace operators include Strong Customer Authentication, KYC and AML checks on sellers, and fund safeguarding. PSD3 is expected to take effect from late 2027 to early 2028. It brings further changes to the SCA exemption framework and commercial agent rules.

PCI DSS is the Payment Card Industry Data Security Standard. It sets security requirements for any entity that stores, processes, or transmits card data. Providers at Level 1, the highest certification, process over six million card transactions a year and undergo annual third-party audits. Ryft is certified as a PCI DSS Level 1 service provider. Platforms using an FCA-authorised PSP inherit much of this compliance burden, rather than managing it directly.

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Choosing the right setup for a marketplace

A standard payment gateway and processor work well for a single merchant taking one type of payment. A marketplace splitting funds across multiple sellers needs a provider built for multi-party transactions from the ground up. This could be a PayFac, or a PayFac-as-a-service arrangement under an FCA-licensed partner.

Ryft's payment facilitator model gives platforms sub-merchant onboarding under its own FCA licence. This includes split payments and escrow, without the platform needing separate authorisation. For more on the regulatory side, see our guide to PSD3 and what is changing. Platforms wanting the commercial side of facilitation without holding a licence can also review Ryft's whitelabel option.

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