Partnering With the Right Payment Aggregator

Friday, December 13th, 2019

A payment aggregator, or merchant aggregator, is a service provider that allows online retailers to process transactions for the sales they make.

Aggregators enable a retailer to take credit card & debit card payments (aka plastic payments) and transfers to the bank without the need to create a merchant account with a banking institution or card union.

These six points describe in detail what a payment aggregator does;

  • A payment aggregator uses a single merchant account to collect payments from a group of retailers and then distributes to the various business bank accounts, which eliminates the need to create your own merchant account.
  • The aggregator simplifies the taking of payment from shoppers or clients through plastic payments or transfers to bank accounts.
  • The retailer receives their payments from the aggregator in 1 to 3 business days.
  • In essence, the payment collector stores the shopper’s card details to enable quick and hassle-free purchases or keeps finances in an account to enable forthcoming purchases.
  • Aggregating companies like PayPal, Amazon Payments and Google Checkout, have different payment collection strategies, fees, and offerings to retailers.
  • Retailers are advised to look into the costs and pros of each vendor to find an affordable and efficient way to collect customer payments.

A payment aggregator worries about processing transactions on your behalf so that you can concentrate on other business affairs.

The Pros of Using a Payment Aggregator

So what are some advantages of partnering with a payment collector?

  • Easy application: a hassle-free application process where you only have to present a few credentials and get started on taking payments
  • Effective and economical for small-value transactions: improves card and mobile wallet payment processing without charges like set-up fees or fixed costs. Instead, it charges a variable merchant fee for every transaction that goes through.
  • Instantaneous approval: start processing transactions in 3 to 7 business days.
  • Immediate access: start collecting payments soon after signup.

The Downsides of Using a Payment Aggregator

Are there any downsides to using a payment collector?

  • Frequent freezing of accounts: because payment collectors face a high risk of later reverse charges, they take stringent measures (like temporary suspension) when they suspect weird activity by the retailer or card owner.
  • Sky-high fees: because collectors take most of the risk, they charge a higher fee to compensate their efforts and protect their bottom line.
  • Low processing caps: Collectors base their charges on gross processing volume. That is to say, you get a low processing cap than when using your own merchant account.
  • Payments may delay: Payment Aggregators decide when to disburse the funds. Most times funds take 1-2 business days, but they could last longer.

Before partnering with a service, make sure you understand all terms and conditions, plus fee structures. Security is also a concern because you want to collect payments through a secure aggregator to protect customer data.

Wrapping Up

An aggregator is an excellent approach for startups looking to begin taking payments without a hassle. It can also hold the fort for an established business.

Merchants are advised to conduct detailed researches before they partner with any service provider to avoid unfair terms and exorbitant fees.

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