Platform payments ladder: referral vs Connect vs PFaaS vs full PayFac
Who this is for
The founder, COO, or head of payments at a vertical software company that already has merchants in the product and wants to take a rate on their card volume. You bounced off a “best payments platforms” listicle and need the job frame, not another logo wall.
This page is the ladder. How to pick payments is the decision tree for Connect-style vs PayFac-as-a-service vs becoming the PayFac. The payments hub is the short list. This page does not crown a vendor. Order in any related list is editorial fit, not a score you can buy.
Wall-off. This is not payments orchestration, not bank rails as the primary job, and not lending. If the job is a vault or multi-processor router, read those listings as a different cluster. If the job is deposits or capital, leave this page.
The ladder
Four rungs get sold as “we do platform payments.” Name the rung before you name a vendor. Facts below are structural. They are not volume gates. This directory does not invent a monthly volume number that moves you up the ladder.
1) Referral (and ISO-style partner)
Who holds the license. A processor, registered PayFac, or ISO/MSP program. You refer merchants. You are not the registered facilitator.
Go-live shape. Often a partner agreement, a referral or boarding flow, and residual or bounty economics. White-label depth varies. Some programs are high-touch ISV packaging on someone else’s managed PayFac. You may get little control of merchant sell price.
Ops burden. Lightest on underwriting and network registration. Heavier on sales motion and partner management. You still own support expectations if your brand sits on the offer.
Path to graduate. Sometimes a path into managed PayFac or PFaaS on the same commercial family. Treat “path” as a contract claim until you see who is registered today.
Fit signal. You want payments revenue without embedding a full payments product, or you are early and will accept partner-led boarding. Veto. You need to set merchant price inside your UI, own onboarding UX, or claim you are the PayFac on day one.
2) Connect-style platform payments
Who holds the license. The licensed processor (or its registered facilitator) stays on the acquiring program. You create connected accounts, route funds, and take an application fee or partner fee. You do not own merchant processing terms.
Go-live shape. Public docs and, on at least one major platform, a self-serve start are possible. Pricing for the platform fee is often documented. Underlying card pricing still sits on the processor’s rate card unless you are on a pass-through model they expose.
Ops burden. Integration and connected-account UX. KYC/KYB still happen under the processor’s program. You are not standing up network registration.
Path to graduate. Usually not “become the PayFac on this stack.” Graduation here means richer fund flows, IC+ style pass-through where offered, or leaving for PFaaS later. Do not confuse an application fee with residuals you own.
Fit signal. You want payments revenue this quarter without becoming a PayFac. Veto. You need a published interchange-plus buy rate you mark up at will, residual economics assigned to you, or a white-label acquiring program where you set price as the facilitator of record.
3) PayFac-as-a-service (PFaaS)
Who holds the license. Another party is the registered payment facilitator. You embed acceptance, usually set merchant sell price, and keep the merchant relationship. They underwrite sub-merchants and stay on the processing terms. That model is PayFac-as-a-service. A sponsor bank still sits under the program.
Go-live shape. Almost always sales-led. Sandbox and docs may be public. Live money waits on an order form, KYB, and their underwriting of your merchants.
Ops burden. You run product, pricing templates, and merchant relationship. They run facilitator registration, much of underwriting, and program monitoring. Ask who the merchant agreement names.
Path to graduate. Some stacks document a same-API path to take the license later. A path is not residuals today and not registration today. If marketing calls you a PayFac and the contract says they hold registration, you are still on this rung.
Fit signal. You will set sell price and stay the software brand. Veto. You need a self-serve live key with no sales conversation, or you refuse any model where you are not the registered party on day one (that is the next rung, with real cost).
4) Full PayFac
Who holds the license. Your company (or a named affiliate) is the registered facilitator on a sponsoring acquirer. You underwrite sub-merchants. You take more residual upside and more loss liability.
Go-live shape. Acquirer sponsorship, network registration through that acquirer, underwriting ops, monitoring, and capital for losses. Not a dashboard toggle. Not a larger application fee.
Ops burden. Highest. KYC/KYB policy, MATCH and network obligations, chargeback and fraud ops, and sponsor-bank reporting.
Path to graduate. You are at the ownership rung. Further change is bank, processor, or program design, not “become a PayFac.”
Fit signal. Owning underwriting, merchant terms, and the book is the actual job, and you can name sponsor and ops. Veto. You cannot name a sponsoring acquirer, you do not intend to run underwriting, or “PayFac” is marketing language for taking a rate. Taking a rate is referral, Connect-style, or PFaaS.
Buy rate vs revenue share vs talk to sales
Three commercial shapes show up on platform payments. They are not the same as the ladder rungs, but they correlate.
Buy rate (often interchange-plus). You see network cost plus a disclosed processor or facilitator markup. You set merchant sell price above that. Visible math is not ownership of the merchant book. Read interchange-plus.
Revenue share. You split processing economics with the partner on an agreed percentage or residual formula. The split can sit on top of opaque buy rates. Published share percentages are not a full cost stack if the buy rate stays on a Schedule A.
Application fee / partner fee. Classic Connect-style take: a fee field on someone else’s rate card. Fast. Usually not a portable residual book.
Talk to sales / not published. Most PFaaS and full-PayFac programs keep platform buy rates off the marketing site. That is normal. It is also a diligence flag: if you cannot get the buy rate, the registered party, and the merchant-agreement name in writing, you do not have a commercial pick yet.
Public pricing stance (marketing sites, dated with this page)
Facts below are what public marketing pages showed when this page was written. They are not a rate card you should paste into a contract. Cells say not published when the marketing site does not show a usable platform buy rate or share schedule.
| Shape | Example (editorial fit, not a rank) | What marketing publishes | Stance |
|---|---|---|---|
| Connect-style | Stripe Connect | Connect platform fees and monetization models (including Stripe-handles-pricing revenue share eligibility, and you-handle-pricing with application fees / IC+ pass-through options). Card processing still references Stripe Payments pricing. | Published platform fee frames; not a PFaaS buy-rate card you own |
| PFaaS buy-rate | Rainforest | Interchange-plus style buy-rate tiers and per-item fees on a public pricing page; FAQ states no revenue share | Published buy-rate posture |
| PFaaS buy-rate | Moov | Interchange-plus style card acceptance markups and other rail fees on a public pricing page ($500 monthly minimum called out) | Published fee schedule |
| PFaaS revenue share | Tilled | Start-Up / Scaling plans with published revenue-share percentages and monthly SaaS fees; listing notes buy rates still sit on Schedule A | Published share + SaaS; buy rate not fully on marketing |
| PFaaS path | Finix | Marketing pricing page pushes sales conversation; no usable public platform buy-rate schedule for PFaaS | Not published |
| PFaaS | JustiFi, Payabli, Infinicept, Worldpay for Platforms | Sales-led; no public platform buy-rate schedule on the live payments table posture | Not published |
Kill criteria (commercial). Veto a vendor that will not state who is registered, who the merchant agreement names, and whether your economics are an application fee, a buy-rate markup, a revenue share, or residuals that survive if you leave. Veto “you are the PayFac” language when registration sits with them. Veto a published share percentage that hides the buy rate if you need IC+ math to set price. Veto a self-serve story when production keys wait on an order form.
Related
- How to pick payments: Decision tree for the top three ownership jobs.
- Payments: Live short list. Editorial order only.
- PayFac-as-a-service, Payment facilitator, Sponsor bank, Residuals, Application fee, Interchange-plus
Editorial fit listings for this ladder (not a rank, not a buy order):
- Stripe Connect: Connect-style default when you want a rate without becoming a PayFac.
- Rainforest: PFaaS with a published IC+ buy-rate posture; not a path to become the PayFac.
- Finix: PFaaS now, same API if you later take the license; buy rate not published on marketing.
- Tilled: PFaaS with published SaaS + revenue-share packaging; buy rate on Schedule A.
- Infinicept: White-labeled PFaaS with Launchpay holding registration and a same-stack path later.
FAQ
Is climbing the ladder the same as getting a better rate?
No. The ladder is about license, liability, and control. A Connect-style application fee can beat a bad PFaaS deal. A published buy rate can still leave residuals with the registered party. Price the contract. Do not assume a higher rung is cheaper.
If a vendor publishes revenue share, is that a buy rate?
No. Revenue share is a split. A buy rate is the cost stack you mark up. Some partners publish share percentages and still keep the buy rate on an order form. Ask for both if you set merchant price.
Can we start on Connect-style and become a PayFac later on the same vendor?
Only if that vendor documents a same-stack path and you actually intend to take registration. Many Connect-style platforms are not a PayFac graduation product. Some PFaaS stacks are. Read the listing for who is registered today.
Why do so many cells say not published?
Because most platform buy rates are commercial. Public marketing silence is common. It is not automatically a red flag. Refusing to name the registered party or the merchant-agreement counterparty is a red flag.
Does this page tell us which vendor is #1?
No. Vertical Fintech does not sell rank. Use the ladder to name the job, use public pricing stance to set diligence questions, then read the payments listings for fit.
Back to the guides. How a name gets on the short list:How we pick.