How to accept credit cards without a merchant account

July 08, 2019

In today’s world of payments everywhere, anytime, businesses need to be able to accept credit cards, no matter what they are selling. A common way to do this is to set up a merchant account with a merchant service provider. But businesses have another option if they want to accept credit cards without a merchant account, via a payment facilitator service. Let’s take a look at how credit card processing works and the differences between the two options.

How credit card processing works

credit card transaction happens so quickly and seamlessly, it’s easy to forget that a lot is happening behind the scenes. Here’s a quick overview:

The customer provides their card data, which is sent by the merchant’s processing solution to the merchant’s bank (the acquiring bank), then to the credit card network (Visa, Mastercard, Discover, or American Express), and to the customer’s bank (the issuing bank). The issuing bank approves or declines the transaction request and sends a response back through the card network, to the acquiring bank, and ultimately to the merchant’s processing solution to complete the sale.

Choosing a provider

Businesses can contract with a merchant service provider in order to accept credit cards. Signing up for a merchant account isn’t difficult, but it requires completing an application and being approved by the service provider’s underwriting team. The entire process can take some time and effort.

Another option is to use a payment facilitator service. A payment facilitator provider is an aggregated merchant account provider that allows merchants to accept credit cards without individual merchant accounts. A payment facilitator provider serves multiple merchants by boarding them under one, master merchant account. In this way, each merchant often doesn’t need to apply and be approved for their own merchant account and accompanying merchant identification number (MID).

What are the pros and cons of using a traditional merchant account versus a PayFac service to accept payments? Here are a few key things to think about.

Sign-up process

The sign up and onboarding process is quite different between a merchant account provider and a payment facilitator service provider. Applying for an individual merchant account isn’t difficult, but it does require more documentation and time for approval. In contrast, payment facilitator service providers generally offer a simplified, faster merchant account enrollment process since each merchant does not have to be approved for their own MID.

Transaction costs

Since transactions through a payment facilitator service are part of a shared merchant account, fees are usually set at a flat rate without options for varying rate plans. While this simplifies transaction fees for the merchant, it often results in less economical rates for certain merchants.

For example, with a payment facilitator service, a merchant usually pays the same fees per transaction, no matter how many transactions they process. This may be fine for a business with lower transaction volume. But for businesses that process more transactions, a merchant account makes more sense because it offers more flexible rate plans with more savings for higher volume merchants.

In general, payment facilitator services offer one-size-fits-all plans, while merchant service providers can tailor card processing plans and rates to individual merchant’s needs and qualifications— which may result in less cost.

Equipment costs

Whether a merchant processes via a payment facilitator service or a via their own merchant services account, they need a way to input customer credit card data. It can be as simple as a small device attached to a mobile device or an online credit card processing gateway.

Both payment facilitator providers and merchant service providers often offer promotions for free or reduced-price processing equipment. But, merchant service providers usually offer more varieties of available payment terminals— which can be appealing to merchants that have more complex payment needs.

Volume limitations

Merchant accounts tend to offer greater flexibility in terms of transaction volume (often unlimited) and individual sale amount. In contrast, payment facilitator services generally have a limit on the volume that can be processed in a specified period of time.


Both payment facilitator services and merchant accounts pay out funds to their merchant customers, but how the funds are disbursed and how quickly they are disbursed varies widely based on the provider.

Customer support

Because payment facilitator providers serve so many merchants, customer support is generally only offered via email or online. Merchant service providers, on the other hand, often offer more comprehensive customer support including set-up assistance and troubleshooting issues via phone, chat, and email.

Making the decision

How does a small business decide whether to open their own merchant account, or go the route of a payment facilitator service to accept credit cards without a merchant account?

In summary, a merchant account may cost less per transaction, offer more flexible transaction volume, in-depth customer support, and more advanced payment processing tools and services. But, the application and approval process is generally more comprehensive and lengthy. Businesses that have a higher volume in sales, offer more products, or have a need for more customer and business support, may want to establish a traditional merchant services account.

Payment facilitator providers offer simplified onboarding, which can be appealing to smaller merchants that want to get up and running quickly without the responsibility of going through the merchant account application process. It’s important to note, however, that costs may be higher with a payment facilitator service, and merchants may be restricted on the amount of sales they can process and the customer support they can access. Still, for many small, start-up businesses, the ease of using a payment facilitator service is worth these trade-offs.

The best way to whether or not to accept credit cards without a merchant account is to look at the pros and cons we just discussed as they relate to your own business. Want more information? Contact us to talk to a payments expert.