PayFac vs PSP, Which Model Fits Your EU Business?

Choosing the right payment model is critical for scaling in Europe’s regulated environment. Whether you’re a high risk merchant, fintech startup, or marketplace, understanding the difference between a Payment Facilitator (PayFac) and a Payment Service Provider (PSP) can shape your success.

At KunnectPayments, we help European merchants and platforms choose, launch, and operate the best fit model compliant with PSD2, AMLD6, and MiCA.

PayFac (Payment Facilitator): Fast, Flexible, Scalable

A PayFac allows businesses to onboard sub merchants under its master account. This model is ideal for platforms or aggregators that want quick merchant onboarding and unified settlement.

Best for:

• Marketplaces, SaaS, and gaming platforms.
• Faster onboarding and centralized compliance.
• Merchants wanting a single integration for multiple sellers.

At KunnectPayments:
We provide white label PayFac infrastructure that enables instant sub merchant onboarding, real time KYC, and rolling reserves, built for Europe’s regulatory standards.

PSP (Payment Service Provider): Direct and Controlled

A PSP provides merchants with direct access to acquirers and payment networks. It offers more control and transparency but typically involves a longer setup and stricter underwriting.

Best for:

• Larger merchants needing direct acquirer relationships.
• Businesses handling their own compliance and chargeback management.
• Companies seeking customized routing and lower per transaction fees.

At KunnectPayments:
We connect merchants directly with EU acquiring banks and offer multi-rail payment processing cards, SEPA, eWallets, and crypto with built-in fraud and compliance tools.

Conclusion

Both models can power your growth, the choice depends on your size, risk profile, and desired control.

At KunnectPayments, we guide European merchants through setup, compliance, and optimization, whether as a PSP partner or a white label PayFac provider.

Ready to launch your EU payment model?

Contact KunnectPayments today to find the best fit payment solution for your business.