opinion

Direct Account vs. Payment Facilitator: A Merchant's Guide

Direct Account vs. Payment Facilitator: A Merchant's Guide

Deciding which processing solution is the right one for your business is a big decision. Should you apply for a Direct Merchant Account? Or would an IPSP or Payment Facilitator arrangement suit you better? What are the differences and which one best matches your needs?

As specialists in online credit card processing for e-commerce and subscription services for global merchants, Segpay recently launched our Merchant Services Group, a dedicated team able to offer all of these solutions and help businesses determine the arrangement that best meets their needs. Making this decision can be both challenging and confusing. So, this month we are breaking down this financial decision, what it means and how to best decide which way to go.

Look for a service provider that can help guide you to the best solution for your business, including weighing the pros and cons of the myriad solutions available.

Start by considering a few key things: your current resource level, risk tolerance, experience level with payment processing and how much control you want over your payment processing. Let’s consider the options available.

IPSP/Payment Facilitator

IPSP (Internet Payment Service Provider) and Payment Facilitator (a MasterCard term that is largely interchangeable with IPSP) are arrangements whereby merchants are pooled together under their processor’s “master” merchant account. The processor assumes all the risk since the account is in their name. IPSP/PF accounts are held to the same chargeback rules as direct merchant accounts, meaning 1 percent or 100 total chargebacks per year. Payments must be processed on a page that is hosted by the processor and the processor handles all end-user customer support as well.

IPSP or PF solutions are ideal for merchants with little to no experience taking payments. No previous processing history is required and you don’t need to worry about PCI requirements (for payment data security) since the processor is responsible for that. Because IPSP/PF accounts are fully managed, merchants can focus on their core strengths without having to worry about administering payments, refunds, chargebacks, etc. IPSP and PF providers help you stay compliant with chargeback rules and data protection requirements, allowing you to build a reputation which you can later present to a bank when you’re ready to transition to a direct account. Of course, you’re free to remain under an IPSP/PF arrangement if you choose. Segpay has many $1M-plus merchants that choose this approach, allowing them to take advantage of tools such as one click payments, customer-retention programs, bundled additional payment options and end-user customer support.

Direct Merchant Account/Gateway

However, if you are an established business in a space considered low to moderate risk for chargebacks, a Direct Merchant Account with gateway service is a more cost-effective solution. Merchants considered high risk who have built a processing history and reputation through an IPSP can also transition to a direct account, Segpay and many other Independent Sales Organizations (ISOs), which are agents for specific banks, offer this service. With a Direct Merchant Account, you are the one taking the risk and you will be asked to guarantee the account. A gateway is a processing platform that connects to many different acquiring banks. It offers features such as cross sales, load balancing, risk management tools and, in some cases, end-user customer support.

Direct Merchant Accounts are typically suited for experienced merchants that understand payment processing and the management of risk, and perhaps have staff that can handle billing-related tasks in-house. For example, you might already have a call center in place and can leverage that team to handle your payments-related customer service. Or, over time, you may have added staff to help with the billing and payment processing and now they’re well trained and can manage the risk components of your business. A gateway also gives merchants more control of their payment flow. If you want to have your own payment form or even host your own platform, you’re able to do that; keep in mind you’ll need to complete a PCI SAQ (Self-Assessment Questionnaire) or, depending on your volume, and if you’re storing card data, a more in-depth look into your PCI compliance.

Look for a service provider that can help guide you to the best solution for your business, including weighing the pros and cons of the myriad solutions available. Feel free to reach out to us via Twitter @Segpay. Our team will help you every step of the way.

Cathy Beardsley is President and CEO of Segpay, a global leader in merchant services. Segpay offers a wide range of custom financial solutions including payment facilitator, direct merchant accounts and secure gateway services. Under Beardsley’s direction, Segpay has become one of only four companies approved by Visa to operate as a high-risk Internet payment services provider. Segpay offers secure turnkey solutions to accept online payments, with a guarantee that funds are always safe and protected with its proprietary Fraud Mitigation System and unmatched customer service and support.

Related:  

Copyright © 2025 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More Articles

opinion

WIA Profile: Lainie Speiser

With her fiery red hair and a laugh that practically hugs you, Lainie Speiser is impossible to miss. Having repped some of adult’s biggest stars during her 30-plus years in the business, the veteran publicist is also a treasure trove of tales dating back to the days when print was king and social media not even a glimmer in the industry’s eye.

Women in Adult ·
opinion

Fighting Back Against AI-Fueled Fake Takedown Notices

The digital landscape is increasingly being shaped by artificial intelligence, and while AI offers immense potential, it’s also being weaponized. One disturbing trend that directly impacts adult businesses is AI-powered “DMCA takedown services” generating a flood of fraudulent Digital Millennium Copyright Act (DMCA) notices.

Corey D. Silverstein ·
opinion

Building Seamless Checkout Flows for High-Risk Merchants

For high-risk merchants such as adult businesses, crypto payments are no longer just a backup plan — they’re fast becoming a first choice. More and more businesses are embracing Bitcoin and other digital currencies for consumer transactions.

Jonathan Corona ·
opinion

What the New SCOTUS Ruling Means for AV Laws and Free Speech

On June 27, 2025, the United States Supreme Court handed down its landmark decision in Free Speech Coalition v. Paxton, upholding Texas’ age verification law in the face of a constitutional challenge and setting a new precedent that bolsters similar laws around the country.

Lawrence G. Walters ·
opinion

What You Need to Know Before Relocating Your Adult Business Abroad

Over the last several months, a noticeable trend has emerged: several of our U.S.-based merchants have decided to “pick up shop” and relocate to European countries. On the surface, this sounds idyllic. I imagine some of my favorite clients sipping coffee or wine at sidewalk cafés, embracing a slower pace of life.

Cathy Beardsley ·
profile

WIA Profile: Salima

When Salima first entered the adult space in her mid-20s, becoming a power player wasn’t even on her radar. She was simply looking to learn. Over the years, however, her instinct for strategy, trust in her teams and commitment to creator-first innovation led her from the trade show floor to the executive suite.

Women in Adult ·
opinion

How the Interstate Obscenity Definition Act Could Impact Adult Businesses

Congress is considering a bill that would change the well-settled definition of obscenity and create extensive new risks for the adult industry. The Interstate Obscenity Definition Act, introduced by Sen. Mike Lee, makes a mockery of the First Amendment and should be roundly rejected.

Lawrence G. Walters ·
opinion

What US Sites Need to Know About UK's Online Safety Act

In a high-risk space like the adult industry, overlooking or ignoring ever-changing rules and regulations can cost you dearly. In the United Kingdom, significant change has now arrived in the form of the Online Safety Act — and failure to comply with its requirements could cost merchants millions of dollars in fines.

Cathy Beardsley ·
opinion

Understanding the MATCH List and How to Avoid Getting Blacklisted

Business is booming, sales are steady and your customer base is growing. Everything seems to be running smoothly — until suddenly, Stripe pulls the plug. With one cold, automated email, your payment processing is shut down. No warning, no explanation.

Jonathan Corona ·
profile

WIA Profile: Leah Koons

If you’ve been to an industry event lately, odds are you’ve heard Leah Koons even before you’ve seen her. As Fansly’s director of marketing, Koons helps steer one of the fastest-growing creator platforms on the web.

Women in Adult ·
Show More