How PayFacs can stand out in a saturated market

Becoming a payment facilitator was once a bold move. Today, it’s a key strategy for platforms looking to expand. As more players enter the space, many begin to look strikingly alike. With increasing competition, thinner margins and rising regulatory scrutiny, standing out as a PayFac™ is challenging.

Here are four ways PayFacs can position themselves for sustainable growth and the creation of long-term value.

By Kunal Choudhary, financial services vertical, Worldpay.

Deliver embedded value

Most platforms today offer embedded services. The leaders distinguish themselves by providing embedded value – meaning that they deliver financial and operational tools that solve broader business challenges for merchants.

For example, some software as a service platforms have expanded far beyond basic payment acceptance to include order management, payroll, inventory control and customer loyalty tools tailored to industries. This can increase merchant stickiness and make the PayFac a critical operating partner.

PayFacs that focus on solving industry-specific pain points – like split payments for creator platforms or real-time disbursements for gig workers – are more likely to retain merchants and increase their wallet share.

• Tip: In our experience, the most successful PayFacs are not just embedded in the payment flow, but in the whole business workflow. Expanding offerings beyond payments positions PayFacs as long-term partners designed to facilitate growth.

Adopt a vertical strategy

In today’s competitive landscape, horizontal solutions lack the specificity and relevance many merchants demand. A vertical strategy allows PayFacs to tailor their products, onboarding processes, risk models and support infrastructure to the unique characteristics of a particular industry.

For instance, PayFacs serving the legal industry must accommodate trust accounting requirements, while those in healthcare must consider HIPAA compliance and high-volume co-pay settlements. In construction, progress payments create complexity that generic payment processors often don’t address effectively.

By going deep in a specific industry, PayFacs gain operational knowledge, improve market fit and develop features competitors are unlikely to replicate without significant investment.

• Tip: Why not explore underserved industries with high payment volume, complex workflows or compliance burdens? When your solutions are tailored exactly to the needs of the market, you can expect higher adoption and success.

Invest in risk and compliance infrastructure

Underwriting, compliance and risk monitoring remain foundational to the PayFac model, but these areas are increasingly becoming more than regulatory requirements.

Leading PayFacs are building intelligent, dynamic risk engines that go beyond static Know Your Business checks. By integrating machine learning, behavioural analytics and contextual signals (such as geolocation, device fingerprints and payment patterns), these platforms can accelerate onboarding while maintaining robust fraud prevention.

Equally important is transparency. Merchants today expect clear feedback loops, whether they are undergoing risk review or chargeback time limits. Platforms that build trust through proactive communication and adaptable risk policies are more likely to retain high-quality merchants.

• Tip: A PayFac’s risk infrastructure should be a strategic asset, helping onboard merchants faster, reduce losses and enhance credibility with regulators and partners.

Diversify revenue beyond interchange

Relying solely on interchange margins or transaction fees is increasingly unsustainable, especially in price-sensitive markets or geographies with regulated interchange caps.

To build a resilient business model, PayFacs could look beyond the payment transaction to explore growth opportunities like:

• Faster funds access: Offering merchants instant payouts for a small fee.
• Premium features: Charging for advanced reporting, analytics or fraud tools.
• Subscription pricing: Bundling payments with access to software services.

Fintech infrastructure has matured to the point that PayFacs can integrate a broad range of financial services. By doing so, they capture more revenue per merchant and improve total lifetime value.

• Tip: Identify periods when merchants may require more support, have cash flow gaps, or encounter regulation complexity and then deliver targeted financial services at those points.

Greater success for PayFacs

The PayFac market has matured, and with that comes greater expectations from merchants, regulators, investors and platform partners. Success requires more than fast onboarding and clean APIs. It demands strategic clarity, operational resilience and customer-centric innovation.

If you are planning to start or extend your PayFac journey, Worldpay can help you stand out where it matters most. Find out how our tailored solutions and global expertise can power your next phase of growth.