A payment facilitator signs merchants the way an ISO does, but it holds the contract itself and often the settlement money too. Both card networks allow that, and both have rules about it. The rule that decides when a growing sub-merchant has to sign directly with the acquiring bank is where the two networks differ by a factor of ten, and Visa changed its version in October 2025.
This piece sets out what each network's public rules require as of September 2026: the Visa Core Rules and Visa Product and Service Rules dated 18 April 2026, compared with the two 2025 editions, and the Mastercard Rules dated 3 June 2025, the most recent edition we could access. Both networks keep more detail in member-only guides, and an acquirer's contract can be stricter than either.
Visa defines 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: the business the rest of the industry calls a sub-merchant. Mastercard uses the same two terms.
The Acquirer Carries All of It
On liability the networks agree. Under Visa's rules a sponsored merchant is treated as a merchant of its payment facilitator's acquirer, and the acquirer is liable for all acts, omissions and other adverse conditions caused by the payment facilitator and its sponsored merchants, including related legal costs and settlement to either of them. Mastercard's rule is shorter: the acquirer is responsible for all acts and omissions of a payment facilitator and of any sponsored merchant.
Mastercard lets an acquirer hand specific work to the payment facilitator, such as verifying that a sponsored merchant is a bona fide business, paying it and monitoring it, but the acquirer stays fully responsible for anything the payment facilitator fails to do, and the investigation records must reach the acquirer immediately on request.
What Visa Requires Before the First Transaction
An acquirer that contracts with a payment facilitator must be in good standing in all Visa risk management programs and financially sound as Visa determines. It must register the payment facilitator, including an attestation of due diligence, and have Visa confirm the registration before submitting any transaction for it. A payment facilitator Visa considers high-integrity risk must be registered as a High-Integrity Risk Payment Facilitator even if it was registered with Visa before.
The payment facilitator agreement must require the payment facilitator to comply with the Visa Rules and sign a contract with each sponsored merchant, and must commit it to:
- liability for all acts, omissions, cardholder disputes and customer service issues its sponsored merchants cause, and financial liability for each transaction processed for them;
- never asking cardholders to waive their dispute rights, or letting a sponsored merchant do so;
- never signing a sponsored merchant whose acceptance contract was terminated at the direction of Visa or a government agency;
- providing the names of each sponsored merchant's principals and their country of domicile, and transaction reports, to the acquirer and to Visa on request;
- ensuring its sponsored merchants comply with PCI DSS and the PCI Software Security Framework.
The agreement must also give the acquirer the right to terminate a sponsored merchant or the payment facilitator immediately for good cause, fraud or at Visa's request, and it must state the jurisdiction in which the payment facilitator may sign sponsored merchants and the categories of merchant it may sign. A payment facilitator may not serve outbound telemarketers.
Identifiers, reporting and settlement
Visa issues the payment facilitator's identifier and the payment facilitator assigns one to each sponsored merchant; both go in the authorization record. On request the acquirer must give Visa each sponsored merchant's name, DBA and monthly transaction and dispute counts and amounts. The payment facilitator must use the right MCC for each sponsored merchant and must have access to positive matches on the Visa Merchant Screening Service.
A payment facilitator must pay its sponsored merchants promptly, and may sign a sponsored merchant outside its own country only if that merchant is in the acquirer's country and is settled in the acquirer's jurisdiction. The acquirer and the payment facilitator must each keep a complete merchant file for at least two years after the agreement ends.
Visa's US$1 Million Rule, and What Changed in October 2025
An acquirer that contracts with a payment facilitator must sign a direct merchant agreement with any sponsored merchant that exceeds US$1 million in annual transaction volume. For a sponsored merchant new to the payment facilitator, that has to happen before it processes anything. For an existing one, the April 2026 rules allow up to two years after its annual volume passes US$1 million. The payment facilitator may keep providing payment services, including settlement, to a sponsored merchant that has signed directly.
The two-year window used to be shorter for some merchants. The April 2025 edition required the direct agreement at the earlier of the renewal of the sponsored merchant's agreement with the payment facilitator, or two years after it crossed US$1 million. The October 2025 edition dropped the renewal trigger, in a change Visa's summary of changes describes as a clarification, effective 18 October 2025. A platform whose policies still say the direct agreement is due at renewal is working from the old text.
There are two exemptions. The first applies when the payment facilitator has held the relationship for at least two years with the same acquirer, reports to the acquirer regularly on at least the sponsored merchant's volume, disputes and fraud activity, and the acquirer continues to oversee the relationship. The second covers a list of MCCs: utilities (4900), financial institutions (6012), rentals (6513), medical (8011, 8050, 8062, 8099), schools (8211, 8220, 8241, 8244, 8249, 8299), tax payments (9311), court costs, fines and bail (9211, 9222, 9223), and 6051 unless the merchant is high-integrity risk. Neither exemption applies if the acquirer, payment facilitator or sponsored merchant is identified in a Visa risk program such as VAMP or VIRP, or has had excessive risk program violations in the three years before the agreement was signed.
Read together, these rules treat new and existing merchants very differently. A merchant that arrives already processing more than US$1 million a year must sign with the acquirer before its first transaction. One that grows past the line after two years on the platform, with the reporting and the acquirer's oversight in place, may never need to. On the rule's wording, the tenure is counted with the same acquirer, so a payment facilitator that moves its portfolio to a new bank should not assume its large merchants still qualify.
Visa can also require a direct agreement below the threshold. Its high-integrity risk rules let it make an acquirer contract directly with a sponsored merchant that has generated excessive disputes or credits within 12 months, or that has acted to evade the Visa Rules.
Mastercard: US$10 Million, With Conditions
Mastercard's threshold is ten times Visa's. A sponsored merchant exceeding US$10 million in combined Mastercard and Maestro annual volume must sign a merchant agreement directly with an acquirer unless one of two conditions is met. The first requires all of the following: the payment facilitator is registered as a Network Enablement Partner; the acquirer's use of payment facilitators has been through a Franchise Management Program review; the acquirer has read-only access to the payment facilitator's systems; an e-commerce payment facilitator uses a merchant monitoring solution; and the acquirer reviews at least 5 percent of the payment facilitator's newly onboarded sponsored merchants each month. The second is that the sponsored merchant's primary MCC is on Mastercard's exception list, which largely matches Visa's but does not include fines, bail, court costs or 6051.
The figure has moved. Mastercard's rules dated 28 September 2021 and 7 June 2022 set the threshold at US$1 million; the edition dated 4 June 2024 sets it at US$10 million, with the conditions above. Guidance that quotes US$1 million for Mastercard is quoting the older rule.
The sponsored merchant agreement and the payment facilitator's duties
Under Mastercard's rules the payment facilitator signs the sponsored merchant agreement on behalf of, and as an agent of, the acquirer, and the agreement must say so. It must carry every term Mastercard requires in a merchant agreement and ends automatically if Mastercard de-registers the payment facilitator. The payment facilitator must submit only valid transactions, train its sponsored merchants on the rules, and monitor them. Its duty to pay a sponsored merchant is not discharged until the merchant is actually paid, though it may hold back chargeback reserves.
Sponsored merchants in the MCCs Mastercard requires registered, or previously reported under its Excessive Chargeback Program, must be registered in the Mastercard Registration Program before the acquirer accepts their transactions. Under both networks' rules a payment facilitator may not sponsor another payment facilitator or act for a staged digital wallet, which is what stops one platform nesting inside another.
In the US region Mastercard adds two pricing rules. Each sponsored merchant agreement made or renewed after 11 June 2014 must carry a separate fee disclosure that explains, in plain terms, how every fee is calculated, from discount rates and interchange-plus to authorization and termination charges. And the payment facilitator must give 30 days' notice of any new or increased fee, separately from the regular statement.
What a Merchant-Services Team Should Check
- Track annual volume per sponsored merchant per network: US$1 million on Visa, US$10 million on Mastercard and Maestro combined.
- Record the date each merchant crosses US$1 million on Visa and start the two-year clock. Make sure your policy no longer ties the direct agreement to renewal.
- For each merchant over the Visa line, record which exemption you rely on, its tenure with the current acquirer, and the volume, dispute and fraud reports that prove the reporting condition.
- Size a new merchant before boarding it. Above US$1 million a year on Visa, the direct agreement comes before its first transaction.
- In the US, check that sponsored merchant agreements carry Mastercard's separate fee disclosure and that fee increases go out as a separate notice 30 days ahead.
Most of this is data a platform already has. The work is putting volume, boarding date, acquirer and MCC on the same record, with the date each merchant crossed the line, before the acquirer's next audit asks for it.
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About the author
Kyle Hall
Founder
Kyle Hall is a fintech entrepreneur, software engineer, and marketing strategist with over a decade of experience in high-risk payment processing and SaaS development. He is the CEO of PayKings, a leader in high-risk merchant services, and the founder of PulseCRM, a purpose-built CRM platform for the payments industry. Kyle specializes in building custom payment processing systems and growth strategies that empower merchant services providers to scale and succeed in the digital marketplace.