Aggregated Merchant Account

An aggregated merchant account is a card acquiring account that is shared by many businesses. It is opened in the name of an intermediary, normally a payment facilitator, which signs up businesses as its own customers and processes their card sales through its account with an acquiring bank. Each business is a sub-merchant of the facilitator and has no direct contract with the bank for ordinary volumes.

The arrangement, also called merchant aggregation, is what allows online payment companies, marketplaces and software platforms to switch a new seller on within minutes. Its alternative is a dedicated merchant account, which a business holds in its own name after being assessed individually by the acquirer.

In the traditional model, every business that accepts cards has its own merchant account and its own merchant identification number. Under aggregation, the facilitator holds a master identifier with the acquirer and tags each transaction with details of the sub-merchant that made the sale, so that the card networks and the cardholder's bank can still see who the seller is.

Card sales by all sub-merchants are authorized, cleared and settled to the facilitator, or to an account the acquirer holds for the facilitator's merchants. The facilitator then calculates what each sub-merchant is owed, deducts its fees, and pays out to each one's bank account on the agreed schedule. It keeps the ledger showing which funds belong to which seller.

The appeal for a small business is speed. Instead of the financial statements, processing history and site review that conventional merchant underwriting may require, the facilitator collects basic identity and business details, runs automated know your business and sanctions checks, and approves the account at once. Deeper review happens later, as the seller's volume grows or its activity looks unusual.

Because checks at the start are light, the facilitator manages risk afterwards. It monitors each seller's sales and chargeback levels, and may delay payouts, hold a rolling reserve or close an account at short notice. The facilitator is liable to the acquirer for losses its sub-merchants cause, and the acquirer in turn is liable to the card networks, so each party has reason to act quickly on signs of fraud.

Visa and Mastercard permit aggregation under their payment facilitator programmes. The facilitator must be registered with the networks through a sponsoring acquirer, must have a written agreement with each sub-merchant, and must pass sub-merchant details in transaction messages. The billing descriptor on the cardholder's statement usually shows a short form of the facilitator's name followed by the seller's name.

The networks also cap the size of business that may remain purely aggregated. Once a sub-merchant's annual card volume on a network passes a set threshold, it must enter into a direct agreement with the acquirer, although it can continue to use the facilitator's technology. The rules list activities that facilitators may not onboard at all or only under additional conditions, and each sale must carry the correct merchant category code for the sub-merchant's line of business.

Aggregated accounts are usually priced simply. Many facilitators charge a single percentage plus a fixed amount per transaction, known as flat-rate pricing, with no monthly minimum or setup fee. This is easy to understand but can be more expensive at scale than interchange-plus pricing on a dedicated account, because the facilitator keeps the difference between the flat rate and its actual cost on cheaper card types.

• Fast setup. A seller can start accepting cards the same day, with little paperwork and no separate gateway contract.
• Bundled services. The facilitator normally supplies the checkout, fraud tools, reporting and payouts in one product.
• Less stability. Accounts can be frozen or closed with limited warning if the facilitator's risk systems flag the seller, and funds may be held while the matter is reviewed.
• Less control. The seller cannot choose the acquirer, negotiate network-level pricing, or always take its stored card data with it if it leaves.

Growing businesses often begin on an aggregated account and move to a dedicated one once volume justifies individual pricing. Aggregation is distinct from the merchant of record model, in which the intermediary itself is the seller to the customer and takes on tax and consumer law duties for the sale.