A merchant aggregator (sometimes referred to as a processing aggregator) enables merchants to accept credit and debit card payments and bank transfers through the merchant aggregator’s merchant account. In this way, the merchant does not needs to establish its own merchant account. Rather, the merchants who utilize the merchant aggregator are pooled together under a joint merchant account maintained by the aggregator.
Merchant aggregators provide a lower barrier to entry because they manage the merchant account and provide quick setup for merchants. However, because they are taking on additional risk, merchant aggregators have different cost structures than merchants would see if they had their own merchant account. These fees often include transaction interchange and monthly fees in addition to their own merchant account costs, which are often passed down to the merchants under their umbrella. They may also charge additional fees for international transactions, faster funding, and chargeback disputes. Some may also require merchants to maintain a reserve as a way to hedge against potential fraud and other liabilities.
This may not be the right option for merchants who work with other businesses to fulfill purchase orders as some merchant aggregators only support credit and debit card transactions and cannot accept ACH or checks. Merchants also don’t receive the same full-scale fraud and risk mitigation support they normally enjoy with a payment processor via their own merchant account.