From Guild Wars Wiki
Faction merchants are special merchants that appear in outposts and explorable areas in Echovald Forest and The Jade Sea. In outposts, these merchants provide discounted items for members of an alliance who have control over the outpost they are in. In explorable areas, these merchants only provide services to players based on whether they have more unspent Kurzick or Luxon faction on their account (e.g. Kurzick Merchants only provide services to players who have more unspent Kurzick faction than Luxon faction) or players who have bribed the Kurzick Priest/Luxon Priest at that Resurrection Shrine.