Payfac, payfac-as-a-service or referral: which model fits a UK platform?

It usually arrives from one of two directions. A board member has read that platforms earn several times their subscription revenue from payments and asks why you are not a payfac. Or a procurement lead at a large customer asks whether you are regulated to hold their money, and nobody in the room is sure of the answer.

Both questions are about the same thing: who, in the chain between your customer's customer and your customer's bank account, is the regulated party, who holds the money while it is in flight, and who takes the loss when something goes wrong. The model you choose decides what you earn, but it also decides what you hold, what you own and what you have to do every day. The table below sets those four out side by side.

Payment facilitator (payfac). The platform registers with the card schemes through an acquirer, signs up its customers as sub-merchants under its own master account, prices them, and is responsible for underwriting, monitoring and losses. In the UK a business that accepts funds on behalf of others and passes them on is, in most arrangements, providing a regulated payment service and needs FCA authorisation or registration, with safeguarding of customer funds to match. The FCA's guidance on the commercial agent exclusion is clear that a business is likely to be acting for both payer and payee, and so likely to need authorisation, if payments pass through an account it controls before reaching the payee.

Payfac-as-a-service. A provider that is already a payment facilitator lets the platform use its registration, onboarding, risk and settlement under the platform's brand. The platform owns the customer experience and usually sets pricing within limits; the provider holds the funds and carries the regulatory obligations. It is the US market's answer to the cost of becoming a payfac, and the term is used loosely in the UK.

Referral. The platform introduces its customers to an acquirer or processor. Each customer contracts with that provider directly, is priced by it, and is looked after by it. The platform earns a share of the provider's revenue on the customers it referred. Nothing is held, little is owned, little has to be done.

Regulated-partner model. The platform's customers sign up inside the platform's product, each customer is settled in full by the regulated acquiring partner, the platform sets its price above a buy rate and is paid its margin monthly, and payouts go to each customer's own account. The platform never holds anyone's money. A regulated acquiring partner holds the licences and the funds throughout. This is the model Synapto uses: Synapto is not a payment facilitator and does not hold funds either; the regulated acquiring partner does.

What each model means for a UK platform, under four headings: what you earn, what you hold, what you own and what you do. Checked October 2026; models are described generically.

The line in the table that most changes the decision is "what you hold". The FCA's PS25/12, published in August 2025, strengthens the safeguarding regime for payment and e-money firms from 7 May 2026: daily reconciliation of safeguarded funds, a resolution pack so funds can be returned if the firm fails, and for many firms an external audit of safeguarding. Those are reasonable obligations for a firm whose business is holding other people's money. They are an expensive distraction for a software company whose business is scheduling, bookings or stock.

Becoming a payfac also makes the platform the party that loses when a customer takes deposits, goes bust and leaves chargebacks behind. Under the other three models that loss sits with the regulated provider or partner, priced into what they charge. A platform that becomes a payfac is choosing to earn that risk premium and carry that risk; most should decline.

Referral is where most UK platforms start, because it costs nothing to set up. It is also where most platforms stop moving customers. The customer signs with the provider, so there is nothing to sign up to inside your product; the provider sets the price, so you cannot price a group to move it; and the provider looks after the customer, so the features that would keep them on your payments never get built. The PSR's 2021 review found that merchants rarely switch acquirer because prices are opaque and contracts never end. A referral deal leaves your customers in exactly that market, with your logo on the introduction.

1. Size your payment volume. If the payment volume through or beside your product is small, referral is honest and cheap. If it is large, the share you give up under referral is the biggest number in the comparison.
2. Decide whether you want to set the price. If pricing by group is part of how you will move your customers, you need a model where the fee is yours.
3. Decide whether you ever want to hold money. For almost every software platform the answer is no, which removes the payfac column.
4. Ask who signs the customer. If the customer contracts with someone else, you do not own the relationship, whatever the revenue share says.

For most UK platforms with real payment volume, that leaves a choice between renting payfac infrastructure and the regulated-partner model. The difference is who the customer belongs to, who sets the price, and whether a partner also moves your customers or only processes their payments.