Payment Processing Models
Multiple payment processing models are supported to enable platforms, merchants, and financial service providers to accept, manage, allocate, and distribute funds across different business relationships.
While each model serves a different commercial purpose, they all define how payments are accepted, who owns the merchant relationship, how transaction proceeds are distributed, and what operational, risk, and compliance responsibilities apply.
Understanding these models helps organizations select the payment structure that best aligns with their business objectives, participant ecosystem, and fund flow requirements.
Example Use Cases
Marketplace Model
The Marketplace model enables a platform to facilitate transactions between buyers and multiple independent sellers.
The platform acts as the orchestrator of the commerce experience while each seller remains the merchant responsible for the goods or services being sold.
Commerce Hub can support payment collection, fund allocation, and payout activities across participants based on the marketplace's business model.
Example:
A delivery marketplace collects a $100 payment from a customer. Commerce Hub allocates $80 to the restaurant, $15 to the delivery provider, and $5 to the platform as a service fee.
Payment Facilitator (PayFac) Model
The PayFac model enables the platform to sponsor and manage a portfolio of sub-merchants under a single payment processing relationship.
The platform is responsible for merchant onboarding, compliance oversight, risk management, and ongoing merchant administration, while Commerce Hub supports payment processing and fund distribution activities.
Example:
A software company operating as a PayFac onboards thousands of merchants under its program. When a merchant processes a card payment, Commerce Hub routes the transaction through the PayFac relationship and supports the allocation of funds and fees to the appropriate participants.
Independent Software Vendor (ISV) Model
The ISV model enables software providers to embed payment capabilities within their application while the merchant maintains a direct payment processing relationship with the acquiring bank or processor.
The ISV provides technology and commerce enablement services, while Commerce Hub supports payment acceptance and transaction management through the merchant's configured processing relationships.
Example:
A point-of-sale software provider offers integrated payments to retail stores. Each store has its own merchant account, and Commerce Hub processes transactions on behalf of the store through the configured processor.
Independent Sales Organization (ISO) Model
The ISO model enables an organization to market, distribute, and support payment processing services for merchants while leveraging acquiring banks, processors, or payment providers for transaction processing.
The ISO serves as the primary merchant-facing relationship and may assist with merchant onboarding, account management, payment solution enablement, and ongoing support.
Commerce Hub supports the payment transaction lifecycle, reporting, and operational payment functions for merchants acquired through the ISO channel.
Example:
An ISO partners with a processor to offer payment acceptance services to small businesses. A retail merchant signs up through the ISO and begins accepting card payments through Commerce Hub.
The processor handles transaction processing and settlement, while the ISO manages the merchant relationship, support, and payment program guidance.
See Pay-in Relationship to Split/Allocation - Fund Allocations Instructions
Risk and Compliance Impact
As the Merchant of Record, the platform assumes primary responsibility for payment acceptance and must ensure appropriate oversight of participants receiving funds.
Allocation and payout activities should support applicable regulatory, compliance, reporting, and financial recordkeeping requirements while maintaining clear traceability of how transaction proceeds are distributed across all participants involved in the transaction.