Ideal Cost Reacts: The U.S. Chamber of Commerce’s “What are Payment Aggregators?”
In this article, there is no editor disclosure for affiliate compensation from third-party advertisers. The U.S. Chamber of Commerce is not like your local small business networking organization known as your town’s Chamber of Commerce but is one of the most prominent American lobbying groups. Knowing that a lobbying group may not always be objective, can we verify the article’s claims and grade them for honesty and transparency? Let’s find out.
What are aggregators?
“A payment aggregator is a service provider that allows merchants to process mobile or e-commerce payments. They let businesses accept credit and debit card payments without setting up a merchant account through a bank.
Instead, you use a third-party payment provider to process your online transactions for you. The provider groups your business with other merchants and accepts payments on behalf of everyone.”
This assessment is 100% correct. Companies like Square, PayPal, and Stripe allow their clients to cut through the traditional risk and underwriting requirements and set up their account right away. They can do this because they essentially function as the owner of the merchant account and sublease it to individual businesses. Thus, accepting the payments on their behalf and routing the funds the correct bank accounts.
Why you should use a payment aggregator
“The application process is simple. Setting up a merchant account can be tedious and often involves an in-depth look into your business. In comparison, payment aggregators require little paperwork to get started.
You can get started right away. If you’re starting your business, you’re probably anxious to begin accepting payments right away. Once the payment aggregator processes your application, you can begin accepting online payments right away.”
Another solid answer. The low barriers to entry and efficiency are why companies like Square, PayPal, and Stripe grew so quickly. A regular merchant account would never let you submit a few details online and start accepting payments within 24 hours.
“The fee structure is straightforward. Most payment aggregators charge a flat fee that is easy to understand. And there are no long-term contracts so you can always switch to using a merchant account at a later date.”
Very true. Amazingly, we hear feedback that clients are willing to pay a little more for the simplicity of having one or two fixed processing fees without any surcharges. Clients also like the flexibility of being able to try an aggregator out for a short time before growing into a traditional merchant account.
Why you shouldn’t use a payment aggregator
“Delayed funds. When your customers pay you, the money goes through the payment aggregator first. This means they have control over when the funds are dispersed. Most will put a 24-48 hour hold on dispersing the funds but in some cases, the hold could be longer.”
Delayed payments are among the biggest concerns when signing up with an aggregator. Since the risk and underwriting isn’t done on the front end, your account may face funding delay or a frozen account. The funding delay could last as long as six months. Imagine making a sale today and not receiving the money for six months. While this may happen with a traditional merchant account, it is infrequent and only reserved for extreme circumstances.
Our expectations from the source were quite low, but amazingly this is among the clearest articles we’ve reviewed. Because there isn’t a third-party affiliate arrangement, the article is entirely based on facts and based on common industry knowledge. Even though the piece is short and doesn’t provide in-depth analysis, we appreciate that there is no hidden agenda.
We give this article an A-
Don’t Take On The Credit Card Processors By Yourself
Since 2009, IdealCost.com has helped hundreds of companies nationwide reduce their merchant account fees through identifying and fixing hidden profit, overcharges, fake fees, and billing errors. Clients have saved $300-$20,000 per month on their credit card processing fees without going through the hassle of changing their processing vendor, bank, or equipment. Switching credit card processors should be a last resort, only reserved for funding delays, poor customer service, or technical difficulties. Before you consider switching credit card processors, see if you qualify for IdealCost.com’s monthly savings program. Upload your most recent merchant statement for a free analysis. You’ll receive an estimate within 24 business hours.
If you are opening a new credit card processing account or switching credit card processors, feel free to contact us for a free consultation. IdealCost.com can help secure the best terms and fees based on your specific needs.