The line between payment facilitator and acquirer is disappearing. PayFacs that spent years relying on sponsor banks are now applying for acquiring licenses and connecting directly to card networks. This shift isn’t accidental. It’s economic gravity at work.
an article by Robert Kraal, Co-founder at Silverflow
Payment facilitators built businesses by simplifying merchant onboarding and payments for specific verticals. Hotels, restaurants, SaaS platforms. They understood their merchants’ needs better than traditional acquirers ever could.
But they paid a steep price for that convenience. Sponsor bank fees, processor markups, and limited control over the payment experience. For every dollar in revenue, 30-40 cents went to intermediaries.
The math stopped working once PayFacs reached scale. When you’re processing billions annually, those intermediary costs become massive profit leaks. Vertical specialization that once justified the markup now makes direct acquiring more attractive.
Technology costs have dropped dramatically, too. Building acquiring infrastructure used to require tens of millions in investment. Modern cloud-native platforms cut that cost by 80%. The barrier to entry isn’t what it was a decade ago.
Card networks like Visa and Mastercard are rolling out the welcome mat. They see specialized PayFacs as more ambitious partners than legacy banks that treat acquiring as a side business. The registration process is more streamlined, the support more engaged.
Volume thresholds matter less than they used to. A PayFac processing $500 million in a focused vertical can negotiate better economics than a general acquirer doing $5 billion across scattered merchants. Concentration gives you leverage.
The risk management piece has flipped, too. PayFacs already handle underwriting, fraud monitoring, and chargeback management for their sub-merchants. Becoming an acquirer just formalizes what they’re doing anyway.
What this means for the industry is fragmentation at the top and consolidation at the bottom. Specialized acquirers will dominate specific verticals while generic processors lose differentiation and margin.
At Silverflow, we’re seeing this transformation accelerate. PayFacs who had to rely on large incumbant acquirers, are now switching and becoming the acquirer themselves, using our platform.
The payments value chain is compressing. Middlemen are becoming principals or disappearing entirely.
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