When a buyer checks out, the marketplace (typically using a payment facilitator, or 'payfac', model) collects the card funds into a single settlement account rather than paying each seller directly. An internal ledger records what each seller earned, net of platform fees and any reserve held back for refund/chargeback risk. On a payout schedule, the platform sends each seller their balance over ACH or an instant rail. Sellers usually have to be onboarded and identity-verified before money can flow to them.
The flow at a glance
Who’s involved
- Buyer
- Pays for the goods or services at checkout
- Marketplace / payfac
- Collects funds centrally, runs the ledger, and pays sellers out
- Sponsor/acquiring bank
- Sponsors the payfac into the card networks and holds the settlement funds
- Seller
- Provides the goods or services and receives a payout
How it moves, step by step
- 1messageBuyer
The buyer pays at checkout; the card is authorized in real time (a check and hold), confirming the card is good for the amount. No money has moved yet.
- 2moneyMarketplace / payfac
On clearing and settlement, the card funds land in the platform's settlement account at its sponsor/acquiring bank, not in the individual seller's account.
- 3messageMarketplace / payfac
The platform's ledger credits the seller's balance for their share and records the platform's fee and any reserve held back. This is bookkeeping, not a money movement.
- 4exceptionMarketplace / payfac
A new or higher-risk seller may need KYC/identity verification completed before any payout is allowed; until then their balance is available on the ledger but locked.
- 5exceptionMarketplace / payfac
The platform may hold a rolling reserve or delay payout to cover potential refunds and chargebacks, so the payable balance can be less than the gross sale.
- 6messageMarketplace / payfac
On the payout schedule (e.g., daily or weekly), the platform initiates a payout to the seller for their net available balance.
- 7moneySponsor/acquiring bank
The payout settles to the seller's bank account, commonly via an ACH credit, or via an instant rail when the platform offers faster (often fee-bearing) payouts.
- 8exceptionMarketplace / payfac
If a buyer later disputes or refunds, the platform claws the amount back from the seller's future balance or reserve, since the funds may already have been paid out.
When it’s final
Card funds typically settle to the platform within a small number of business days; seller payouts then follow the platform's schedule. ACH payouts usually land in one-to-a-few business days, while instant-rail payouts can arrive within minutes when the rail and both banks support it, often for an added fee. Exact timing varies by processor, rail, and risk settings.
Risk & reversibility
Educational framing only, not legal, compliance, or tax advice. Whether a platform acts as a payfac, a marketplace, or a merchant of record carries different regulatory, KYC/AML, and liability obligations, and reserve and onboarding practices vary by sponsor and processor. Confirm your setup with your sponsor bank, processor, and counsel.
Common misconceptions
Myth: The buyer's money goes straight to the seller's bank account.
Reality: In a payfac/marketplace model the funds typically land in the platform's settlement account first. The seller's 'balance' is a ledger entry until the platform runs a separate payout leg to the seller's bank.
Myth: A marketplace and a 'merchant of record' are the same thing.
Reality: Being merchant of record means the platform is the seller of record and takes on the merchant obligations (and liabilities) for the transaction. A pure marketplace/payfac can instead facilitate payments between independent sellers and buyers; the legal and liability picture differs and shapes who owns refunds and disputes.
See it in the studio
Terms in this guide
Sources
- Visa payment facilitator model ↗ · Visa (operator). Network rules defining the payfac/sponsor relationship and settlement.
- ACH rules for credit payouts (ODFI/RDFI) ↗ · Nacha. Governs the ACH credit leg commonly used for seller payouts.
- Mastercard acceptance and facilitator rules ↗ · Mastercard (operator). The Mastercard Rules define acceptance and payment facilitator obligations.
Educational, plain-English explainers. Not legal, compliance, tax, or financial advice. These cover fundamentals, not current fees, limits, or rates (which change). Rails and parties vary by program and country, so verify specifics against primary sources. Last reviewed June 2026.