The short answer
Two common ways a business takes cards:
- A merchant account. You sign an agreement directly with an acquirer: a bank or company that is a member of the card networks. TD Merchant Solutions works this way: its terms say your merchant agreement is “with The Toronto-Dominion Bank.”
- A payment facilitator. You sign up with a company that has its own agreement with an acquirer. It signs up many businesses under that one agreement. Stripe and Helcim both say they work this way.
Either way, your customer’s card sale ends up with an acquirer, which sends it into the card networks.
Payment facilitator vs payment processor: what’s the difference?
“Payment processor” is a loose term. People use it for any company that handles card sales for a business. It can mean the acquirer, the company that runs the technology, or the company that sold you the service.
“Payment facilitator” is a specific role in Visa’s rules: “An entity that contracts with an Acquirer to deposit Transactions, receive settlement from, or contract with an Acquirer on behalf of a Sponsored Merchant.” A Sponsored Merchant is a business that signs up with the payment facilitator instead of signing directly with an acquirer.
So a payment facilitator is one kind of company people call a payment processor. The difference is who your agreement is with:
| Your agreement is with | Example, per their own pages | |
|---|---|---|
| Payment facilitator | The payment facilitator, which has its own agreement with an acquirer | Stripe and Helcim say they are payment facilitators |
| Direct merchant account | The acquirer itself | TD: “your merchant agreement … with The Toronto-Dominion Bank” |
The sections below explain each role, with Visa’s definitions.
What a merchant account is
Visa’s rules define the roles.
- Merchant: “An entity that accepts a Card for the sale of goods or services.” That is you.
- Acquirer: “A Member that signs a Merchant or Payment Facilitator … and directly or indirectly enters a Transaction into Interchange.” In plain words: the network member that signs up businesses and sends their sales into the card system.
- Merchant Agreement: “A direct contract between a Merchant and an Acquirer or between a Sponsored Merchant and a Payment Facilitator.”
Visa’s rules say: “An Acquirer must have a Merchant Agreement with each of its Merchants.” When people say “merchant account”, they usually mean that direct agreement.
Example: TD. TD’s terms say they form “your merchant agreement … with The Toronto-Dominion Bank.” TD’s terms also say TD has an agreement with Fiserv Canada Inc., under which “TD will remain your Merchant Services provider” and will be supported by Fiserv’s payment processing products, including Clover devices.
What a payment processor does
“Payment processor” is a loose term. People use it for any company that handles card sales for a business. Behind the scenes, there can be several companies: the acquirer, a company that runs the technology, and the company that sold you the service.
TD’s example shows this: the agreement is with TD, and the processing platform is Fiserv’s.
Where payment facilitators like Stripe and Helcim fit
Visa’s rules define a Payment Facilitator as “An entity that contracts with an Acquirer to deposit Transactions, receive settlement from, or contract with an Acquirer on behalf of a Sponsored Merchant.” A Sponsored Merchant is a business that “contracts with a Payment Facilitator” to accept cards.
Visa’s rules say: “A Payment Facilitator must have a Merchant Agreement with each of its Sponsored Merchants.” So you still sign an agreement, but it is with the payment facilitator.
What some providers say about themselves:
| Provider | What their own pages say |
|---|---|
| Stripe (Canada) | “Stripe Payments Canada, Ltd. is a Payment Facilitator of the following Payment Method Acquirer”: Peoples Trust Company and PNC Bank Canada |
| Stripe (US) | “Stripe, LLC is a Payment Facilitator of the following Payment Method Acquirers”, including Cross River Bank, Fifth Third Bank and PNC Bank, N.A. |
| Helcim (Canada) | “Helcim operates as a Payment Facilitator sponsored by Elavon Canada Company.” Its terms define its Acquirer as Elavon Inc. and Elavon Canada Company |
| Square (Canada) | Its terms say the agreement for Payment Services is with Square Canada, Inc., and refer to Square’s “processors”. The pages we read do not name an acquirer |
| TD Merchant Solutions | Direct merchant agreement with The Toronto-Dominion Bank |
Why the difference matters when something goes wrong
Who answers to the card networks. Visa’s rules say: “A Sponsored Merchant will be treated as a Merchant of its Payment Facilitator’s Acquirer.” They also say an acquirer that contracts with a payment facilitator “is liable for all acts, omissions, and other adverse conditions caused by the Payment Facilitator and its Sponsored Merchants.”
Visa’s rules also require a payment facilitator’s agreement to say that it is “liable for all acts, omissions, Cardholder disputes, and other Cardholder customer service-related issues” caused by its sponsored merchants.
Who can hold your money. Each provider’s terms set this out:
- TD: after an account closes, TD’s terms describe a holdback, used for amounts that come due in the 180 days after termination.
- Helcim: its terms describe a reserve: Helcim may withhold funds or require you to keep an amount to secure your obligations.
- Square: its disputes help page says it places “an immediate hold on the disputed funds” when a customer disputes a sale.
Who handles disputes. On a chargeback, your provider is your contact. See Chargebacks: What They Cost and How They Work.
Sign-up and pricing. Stripe, Helcim and Square publish their rates on their websites. TD sets its own rates in each merchant’s agreement. Published examples sit side by side in Flat Rate vs Interchange Plus vs Tiered and the provider pages for TD Merchant Solutions, Helcim and Square.
Questions to ask any provider
- Who is the acquirer for my sales?
- Is my agreement with you, with a bank, or both?
- When can you hold back or reserve my money, and for how long?
- Who do I deal with if a customer disputes a sale?
Where to go from here
A provider’s agreement or terms of service names the company the business signed with. Some, like Stripe’s and Helcim’s, also name the acquirer or describe the provider as a “payment facilitator”.
For the fees on your statement, see How to Read Your Merchant Statement. For what providers check at sign-up, see Getting Approved for a Merchant Account. Want a partner to review your statement? We will put you in touch. Start the free statement review.