When it comes to credit card processing, there are a few different types of companies that you might deal with. One is an ISO or independent sales organization, and another is a PayFac or payment facilitator.

An ISO contract with banks to provide credit card processing services. They are typically small businesses that work with a limited number of banks. A PayFac provides credit card processing services to merchants on behalf of a bank or other financial institution. PayFacs typically work with multiple banks and can offer more competitive rates than ISOs.

If you’re looking for the best credit card processing rates, it’s important to understand the differences between ISOs and PayFacs. PayFacs are typically the better option for businesses that process a high volume of transactions since they can offer more competitive rates. If you’re only processing a few transactions each month, an ISO may be a better option, as they typically have smaller fees.

It’s also important to consider the other services an ISO or PayFac offers. Some companies offer additional services like merchant accounts, e-commerce solutions, and point-of-sale systems. Make sure the company you choose can meet your needs and provide low credit card processing rates.

When choosing a credit card processing company, it’s important to consider all of your options. ISOs and PayFacs offer different services and rates, so it’s essential to choose the one that best meets your needs.

Read some of the main differences between ISOs and PayFacs:


The merchant’s contract is key when it comes to PayFacs and ISOs. With an ISO, the contract must include the payment processor whose services they’re using. The ISO can be included in the contract as a third party, but it isn’t necessary, and many ISOs choose not to be a part of the merchant’s agreement. Instead, they deal only with the processor once a merchant has been signed up. This separates the responsibilities of each party and makes sure that everyone knows their role. 

For PayFacs, it’s important to have an ISO in place to ensure that merchants are using their services correctly. And for ISOs, it’s essential to have a good relationship with the processor to offer the best possible service to their merchants.


Because PayFacs take on a greater level of ownership over their merchants, they have a variety of responsibilities that most ISOs don’t. For example, merchants apply directly to PayFacs, making PayFac responsible for the entire application and onboarding process. In contrast, ISOs generally pass merchant information on through their processing partners’ boarding portals and are hands-off.

Additionally, PayFacs are usually responsible for most, if not all, of the underwriting required for each merchant. This is something that only wholesale ISOs typically take on, and even then, it is generally a shared responsibility with the processor.

The responsibilities of a PayFac can vary depending on the size and scale of the organization, but the ones highlighted here are some of the most common. PayFacs play a vital role in the payments industry, and their impact can be seen in both merchant’s and processors’ success.


PayFac is more flexible when it comes to risk management than ISOs. In PayFac, risk management can be done through the bank account to which it has been linked, whereas, in the case of ISOs, they are not allowed to touch the funds or the money in the processing system. If a sub-merchant gets flagged for fraud, PayFac can stop payments to that merchant immediately without going through the ISO.

PayFac can also manage risk by using various filters and algorithms to check for fraudulent transactions. This allows them to keep a close eye on all the merchants under them and stop any potential problems before they occur. On the other hand, ISOs have less flexibility in risk management and are at the mercy of their merchant banks regarding fraud prevention.

Contracts and Merchant Relationships

There are two types of contracts for merchant relationships: dual-party and three-party agreements. Dual-party agreements are made between a sub-merchant and payment facilitator (PF), while the sponsor bank must be a party to the contract in case of ISOs. Three-party agreements add the ISO into the mix. When an ISO sells services to a merchant, the contract is only between the merchant and the sponsor.


ISOs offer more flexibility to merchants than PFs. ISOs typically resell from various processors, giving merchants more options. This allows merchants to find the perfect fit for their business.

PFs, on the other hand, are less flexible, and they usually only partner with one or two processors, limiting the products and services available to merchants. However, PFs make up for this by providing convenience and simplicity.

An ISO is the better option for businesses that value flexibility and choice. But if you’re looking for a streamlined solution with fewer moving parts, a PF might be a better fit. Ultimately, it depends on your specific needs and preferences.


Technology is a huge part of both Payment Facilitation (PF) and ISO businesses. Both businesses require their in-house systems that connect with their processing partners to be successful. However, ISOs have less complex projects and require less technology than PFs.

There are also some popular technologies that both ISOs and PayFacs use to gain a competitive advantage, reduce costs and improve merchant acquisition. One of the most popular and influential shared technologies is client asset management software, platforms that provide the prospecting, selling, and maintaining tools ISOs and PayFacs need to excel in an overcrowded payments industry.

Why Choose Kryptova?

Kryptova is the perfect solution for businesses that want to accept credit cards and cryptocurrencies. We provide a single integration to help you process payments quickly and easily. Our robust payment methods include everything you need to keep up with the latest payment demands from your customers. With Kryptova, you can focus on running your business while we take care of the payments.