What is a Payment Aggregator?
A payment aggregator is a service provider that offers credit card processing to various merchants on a shared basis using a Master MID. A payment aggregator primarily serves as an intermediary between the merchant and the card networks. By using the services offered by the payment aggregator, merchants can accept various types of payment methods, including credit cards, debit cards, alternative payment methods, and more.
When working with a payment aggregator, merchants are not required to open a dedicated merchant account. In some cases, payment aggregators operate as payment facilitators, which create sub-merchant accounts under the master MID. The merchant still receives a form of account, but it operates under the aggregators’ umbrella.
Setting up this type of account is extremely easy and very convenient for startups and low-volume merchants, as they do not have to go through the traditional merchant account approval process, which can be time-consuming and expensive. Payment aggregators generally prefer to work with merchants from low-risk industries that have decent credit score. They tend to avoid supporting high-risk merchants because this increases the likelihood of chargebacks and can create challenges for all merchants using the master MID.
Features of Payment Aggregators:
Payment aggregators offer a quick signup process, allowing merchants to start accepting credit card transactions without waiting for days or weeks. In many cases, merchants do not have to sign long paper contracts, as most aggregators accept online application. The contracts offered by aggregators are usually concise and much simpler than those provided by dedicated merchant account processors.
When using a solution powered by a payment aggregator, merchants don’t need to worry about various technical and regulatory requirements, as these are primarily handled by the aggregator itself. This helps merchants save money and other resources. Many aggregators offer fixed pricing structures, though some may provide variable pricing models depending on the merchant’s industry or expected sales volume. The costs typically include a fixed transaction percentage on each order and a fixed dollar or euro amount. Some aggregators also charge a monthly fee or gateway usage fee.
The approval process with payment aggregators is generally simpler than other type of providers, but it is worth noting that not all businesses get approved. Payment aggregators tend to avoid working with merchants from industries like adult entertainment, firearms, or other high-risk sectors, even if they meet KYC (Know Your Customer) requirements.
Although merchants can apply to a payment aggregator without any processing history, having one can make a positive impact on the underwriters’ decisions. This allows the underwriters to evaluate the merchant’s risk profile in greater detail. The underwriting team also checks the credit score of the merchant and the company, which helps them decide whether to approve the account. Merchants with negative histories or associations with high-risk industries may face rejection.
FAQ: Payment Aggregator
How much time do payment aggregators take to approve accounts?
Many aggregators approve accounts within 2 to 3 business days. Merchants apply on the payment aggregator’s website and upload the necessary KYC documents. Within a few hours, the underwriters review the application, and if approved, the merchant receives a notification email about the account approval. In some cases, if the underwriting team requires additional documents, they may request them from the merchant. It is important to note that many aggregators immediately provide access to the portal, though these accounts are often in testing mode. Merchants may only be able to accept live transactions once they receive confirmation of account activation from the aggregator.
What is the settlement cycle with aggregated merchant accounts?
Some payment processors offer T+1 settlement, but many prefer to offer longer settlement periods, especially for new merchants. The settlement cycle generally ranges from T+2 to T+7 or longer, depending on the merchant’s risk profile and the aggregator’s policy. Keep in mind that aggregators may impose certain conditions that could delay payouts for newer accounts.
How does integration work with payment aggregators?
The payment aggregator provides detailed API information for integrating the merchant’s website. Most aggregators also offer ready-to-use eCommerce plugins for platforms like Shopify, WooCommerce, WordPress, Magento, Wix, BigCommerce, and ZenCart.
What are the risk factors associated with an aggregated merchant account?
If a merchant works with a reputable aggregator and does not violate the terms and conditions of the agreement, these accounts are typically reliable. However, the biggest risks with this type of account include the possibility of account closure, freezing of funds, unnecessary questioning, slow support, and scalability challenges.
Since aggregators manage accounts for various merchants operating in different industries, each with different risk profiles, if the account receives any warnings from the sponsor bank, the aggregator may start shutting down accounts deemed risky. While this is a precautionary measure, it can be extremely challenging for borderline accounts. In such cases, the aggregator may close the account and begin issuing refunds to customers. If the merchant is found violating the terms of the agreement, the payment aggregator may also report the merchant to the MATCH list.
