What is a payment aggregator?

In a world where e-commerce is on the rise, digital payment processing is also becoming much more popular. For some companies, using a payment aggregator simplifies this process significantly, though the method may not be for everyone.

As e-commerce continues to grow, so too does the number of merchants and vendors looking to break into the online market. Handling online money transfers used to be one of the many barriers for small business owners looking to begin selling online. A person looking to do so would have one option, a dedicated merchant account. While we'll go over the upsides of being in control of your own merchant identification number (MID), for small businesses it can quickly add a great deal of complexity as the owner begins negotiating with each private bank, card association, and financial services provider. In 1998 Confinity (rebranded in 2001 as PayPal) recognized the need for a centralized place to organize, negotiate, regulate, and process transactions on the merchant's behalf, putting into motion one of the first payment aggregators.

What is a payment aggregator?

A payment aggregator is a third-party payment service provider (PSP) that uses one large merchant account to process payments of sub-accounts owned by their users. This setup allows merchants who use an aggregator to quickly access the e-commerce market by significantly reducing the amount of upfront work necessary to accept different forms of payments for everything from bank transfers to credit card payments. By creating one account with a payment aggregator, the merchant can take almost any form of payment without the aforementioned burden of creating multiple accounts with every bank, debit card, net-banking, UPI, and payment type the merchant wants to accept. Instead, the payment aggregator acts as an intermediary with their single master account. Examples of payment aggregators are the services Stripe, PayPal, and other standard e-wallet online payment gateways.

How does a payment aggregator work?

Every bank, card, or other payment method owns its own payment gateway. A merchant needs to negotiate with each payment processor for every payment method they want to accept to use these gateways. Aggregators expedited this process by using their own merchant identification number (MID) to form relationships and negotiate contracts with payment processors. Over time, aggregators combined access to these payment gateways. This process works because any merchant who signs up with the aggregator does not have their own MID and is instead classified as a sub-merchant under the aggregator's MID umbrella. When a merchant accepts a payment, the aggregator processes the transaction under their MID, sends it on to the chosen processor, and, once completed, moves the transaction back under the original sub-merchants account.

Benefits of a payment aggregator

Payment aggregators have blown up for a good reason. And while there are some pitfalls to avoid, there are many more benefits. Payment aggregators are the best choice for smaller businesses looking to get started with no-startup fees and are overall more convenient and cheaper than a merchant account.

Instant access

Getting a payment aggregator is quick and easy. Just create an account for their services and do any quick initial pre-requisite agreements, and you are done. You don't have to go to a bank or submit paperwork, and often acceptance is instant.

Regulated and safe

Under the Payment and Settlement Systems Act, payment aggregators have to have an RBI license and a payment aggregator license and be compliant with the Payment Card Industry Data Security Standard (PCI-DSS). These regulations and guidelines help keep companies safe and let them know that qualified merchants are handling their money.

Predictable settlements

Using a payment aggregator means low, predictable processing fees and less fixed costs. Many aggregators don't need long-term contracts lessening your obligations and only charging you a flat monthly fee as well. You can easily try new aggregators when necessary to save your company money, and the money you pay in a traditional model is often a fixed fee.

Fees and price point

A payment aggregator works best within a payments ecosystem when processing high transaction volumes and smaller-sized transactions. While not all companies have consistently smaller transaction sizes, they still can benefit from the lower fees and easy-to-measure price points.

Cons of a payment aggregator

Payment Aggregators are great for many companies but aren't ideal for all situations. Here are a few reasons why you may want to avoid payment aggregators.

Account holds

Since there is immediate payment processing, you can absolutely get in trouble with chargebacks. Due to the high standard of security that aggregators are held to can lead quickly to an account hold.

Delayed funds

Technically, payment aggregators can float your money for up to 30 days. While most won't do this as they don't want to lose business, even the principal can lead some companies away from payment aggregators. You will often get your funds within 1-4 business days; however, it is essential to know that those numbers aren't certain.

Lower limits

Payment aggregators can pass limits on to merchants and participants, which means you will have lower processing limits than some other methods. Many small businesses won't have issues with this, but it may be a barrier for larger companies that need a hefty limit.

When to use a payment aggregator

There are correct times to use a payment aggregator in comparison to individual merchant accounts, payment facilitators, and using other financial services providers. Using a merchant account may be a better idea for some companies depending on your limit needs and capacity.

Payment aggregators vs. merchant accounts

Unlike payment aggregators, merchant accounts often have much higher limits. On top of that, you can negotiate your own prices and fees with your different credit card brands and other payment methods. Using a merchant account, you could have separate negotiations with Visa and Mastercard without any issues, which isn't often possible when using a payment aggregator.

Make easier business payments with Routable

One of the best ways to make B2B payments (business-to-business payments) easier is by implementing automation. Powerful payments software such as Routable can help you by helping you pay your invoices, accepting online payments, and creating real-time notifications for your team every step of the way. Using automation that integrates with your current accounting software allows your team to work more efficiently without as many manual data entry errors or delays.


Using an automation-powered B2B payment solution can help simplify complex payments workflows, automatically track your transactions to keep audit compliant and prevent fraud, and save your team's time and resources. We can make your payments process faster, safer, and more scalable. Whether a small company looking to use a payment aggregator or a large company needing extra flexibility, Routable can help you make your payments efficient, quick, and painless.


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