Merchant Aggregators vs. Merchant Accounts

Many small businesses find that the ability to accept credit and debit cards can help increase their income and ongoing revenue streams. Knowing the difference between Merchant Aggregators and merchant Accounts can be extremely beneficial before applying. Signing up for Merchant Services with a traditional merchant account can seem like a daunting task but oftentimes, it is well worth the extra effort.

Payment Gateway Application

Merchant Service Provider will most likely ask for additional supporting docs. These can often include some or all of the following – Credit History, Articles of Incorporation, Bank Statements, Financials, Copies of Previous Credit Card Statements if applicable, and more. This is to ensure they are setting up the account properly for what the industry calls a “direct mind.” All of these supporting docs help underwriters with their final decision when approving or denying a merchant account.

Rather than spending the time to set up a merchant account, many small businesses often turn to a Merchant Aggregator. Merchant Aggregators provide fast approval but oftentimes will shut your account down after the fact, once you start processing. This is due to their business model of approval first and review later. Knowing the difference between Merchant Aggregators and merchant Accounts is crucial to having the proper payment processing solution. 

What is the difference between Paypal, Stripe, Google Wallet, Square, Payoneer, Shopify and a Traditional Merchant Account?

Paypal, Stripe, Google Checkout, Payoneer, and Square are some of the biggest Merchant Account Aggregators in the business. They allow small businesses to process credit card transactions without having to sign up for a traditional merchant account. This works because the Merchant Account Aggregator does all the initial work to set up a merchant account. Basically, they establish their own merchant account and aggregate or run your transactions through their account. 

They will then allow small businesses who sign up for their services to use a sub-merchant account under their parent account. All sub-merchants will have separate access to their own accounts. Merchants are able to view their daily activity without viewing other accounts that are sharing the main account. The Merchant Aggregator takes the initial risk of processing the sub- merchant’s transactions. They do this by closely monitoring their transaction activity and delaying their funding.

When you sign up for a traditional merchant account, you are using a merchant account that belongs to you and only you. In terms of setting up a merchant account, the process can be a little more complex but you will have much more overall control over your account. With your traditional merchant account, your fees can be negotiated based on your volume. Aggregators have higher monthly fees when you are doing volume as they do not take this volume discount into consideration. 

The difference between Merchant Aggregators vs. Merchant Accounts is mostly, processing volume related. Aggregators tend to be more in line with businesses accepting approximately $2,000.00 – $3,000.00 a month in credit card transactions. Traditional merchant account providers are looking for businesses that intend to scale back or are more established. They mostly seek higher volume and growth potential merchants that will be in business for years to come.

scroll down more

Who Should Use Merchant Aggregator Processing Services?

Merchant Aggregators can be an attractive option for small business owners who need a quick solution to process credit card transactions. You typically only need a credit card or bank account on file. Additionally, you only pay fees when a transaction is processed and it only takes a few hours to set up an account through a merchant account aggregator.

Merchant Aggregators are not typically favored by issuers and merchant service providers as the potential for fraud is extremely high with these accounts. Merchants who sign up for an aggregated account typically avoid the complex screening process that many small businesses go through when signing up for a traditional merchant account. 

Because companies like Paypal, Google, Stripe, and Payoneer, credit card companies and payment providers still enjoy working with merchant account aggregators. It’s a popular choice for many small, legitimate businesses just getting started due to their limited Monthly Fees.

Credit card companies acknowledge aggregators as “extremely high risk” and always subject aggregators to stricter rules when it comes to processing transactions. Oftentimes, small businesses that use aggregators will find much longer hold times on the money processed and eventually deposited into their bank accounts. This is usually standard procedure for new businesses until they show a proven history of legitimate transactions that are successfully processed without any disputes or chargebacks.

There are also strict rules in place for how much volume can be processed through a Merchant Account Aggregator. If you go over the processing limit, your funds will be put on hold and your account will potentially be shut down. If so, you will be required to set up an official merchant account with a direct mind, usually on your own. 

A payment aggregator can also quickly suspend your account at any time. Should another business besides yours commit fraud in that portfolio, all accounts in that same portfolio could suffer.

Also, unlike Merchant Accounts, Merchant Aggregators vs. Merchant Accounts have different fee structures. With a traditional Merchant Account, you might be able to negotiate merchant service rates and fees depending on your monthly volume, business history, or potential for growth. Direct merchant accounts are specifically customized for your specific business model. This means your merchant account service provider is much more likely to find ways to lower your fees based on your industry, business model, and overall performance.

scroll down more

Who Should Consider a Traditional Merchant Account?

If you have a stable business model and a higher transaction volume than approximately $5,000.00 per month and would like to customize your fee structure, then you may want to consider a traditional merchant account. While you are typically charged a monthly fee, your percentage rate and per-transaction fees are lower. 

You will also have access to different tools for your business including, virtual terminals, quickbook integrations, credit card processing equipment, recurring billing, invoicing and extensive reporting. Additionally, you will be offered various software plug-ins to assist your business every step of the way. Please make sure to ask about these additional services as it could increase your monthly fees.

How Do I Set Up a Traditional Merchant Account?

Many Traditional Merchant Providers need as much information as they can get, to get you the best pricing possible. Based on your history and income they can offer a variety of options that will work best for your business. In most cases, a recent credit card processing statement if you are currently accepting transactions and/or a completed Pre-Application will get the ball rolling. Any additional documentation you may be asked for could include some of the items located here in our FAQ’s.

How Do I Set Up an Aggregator Account

To sign up for an Aggregator Merchant Account, you will need a verifiable email address. Be sure that it is one you use often as all communication and sales transactions will be sent through this email. While signing up with an Aggregator is free and easy to do, you will still need some supporting docs. 

You will also need a credit card or a bank account on file to transfer money and pay for transaction fees. From there you can do a variety of things with your Aggregated Merchant Account. 

How Do I Set Up a Google Wallet Account?

To set up a Google Payments account, you will need to log into the Google Payments Merchant Center. This can typically be done with a Gmail Account. You will be asked to fill out the following forms for your business account:

“Your Business name: Enter the name of your business as you want it to appear on your page. Remember that this information will be shown to your customers and will also be shown on your receipts.

Contact name: Enter the name of an authorized representative for your company. This should be the person Google can contact if we have questions about your account.

Business Location: Provide your legal business address as it appears on official documents.

Address: It’s important that we have a valid, physical address on file for your business. For that reason, we do not support PO box addresses at this time.

Phone number: This should be a phone number that Google can contact if we have questions about your account.” *


Choosing between Merchant Aggregators vs. Merchant Accounts really comes down to understanding the credit card processing needs of your business. If you are confused, need help, or would like to discuss the difference between Merchant Aggregators and Merchant Accounts, contact a SecureGlobalPay representative today!

*Source: Google Support

Start Accepting Payments Today.

Apply Now!