Merchant Account Aggregator

A merchant account aggregator is defined as a company that processes payments for business under its own master merchant account.
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Merchant Account Aggregator

A merchant account aggregator - also called a payment aggregator or a payment service provider (PSP) - is a company that processes payments under one master merchant account. 

Using this type of service allows businesses to process payments without having to apply and get approved for their own merchant account with a merchant services provider. 

There are several companies that offer this service. The main ones are: 

  • PayPal
  • Stripe
  • Square

How Does Working with a Merchant Account Aggregator Work? 

Payment service providers have their own Merchant Identification Numbers (MID). They add businesses (sub-merchants) to their master accounts and process payments for them. 

Small and medium-sized businesses enjoy this arrangement because it offers them a host of benefits, including: 

  • A quick application process. 
  • A fast, automated underwriting process, which typically means fast approval. 
  • The ability to begin processing payments almost immediately. 

Many businesses like the fact that PSPs use flat-rate pricing too. This just means that they charge the same processing fees for all transactions across the board. It makes accounting much easier for the business. 

The Problems with Payment Aggregators

At first, working with a payment aggregator may seem to be the perfect solution. There are a lot of pros, but there are many cons as well. 

Businesses that choose a PSP will find that: 

  • They are unable to track customer data. 
  • They lose control over the checkout process and may not know if there is a problem that needs to be addressed. 
  • They cannot host their own shopping cart checkout page. 
  • They cannot manage their own payment preferences. 

The biggest concern about working with a merchant account aggregator is the risk of losing your account due to excessive chargebacks. 

Businesses have lost the ability to process payments with almost no notice. To make matters worse, the PSP could freeze or suspend your funds with no notice. Accessing them again could take months. 

Are Payment Service Providers a Good Choice at All? 

Working with a company like PayPal, Stripe, or Square for payment processing services might be a good first step for small business owners or new companies. If you don’t have very many sales each month, you may want to consider a PSP just to get started. 

But it should probably not be something you rely on long-term. It won’t be long before you realize that you’re being overcharged for these services. There are more cost-effective ways to process payments, and working with a merchant account provider is the best option. 

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