An aggregate merchant account is also called a ‘shared’ merchant account in which an acquiring bank places high risk merchants on the same account. Where retail, low and some high risk merchants have their own custom merchant accounts, aggregate merchant accounts house several merchants who also share one billing descriptor. Typically, this is often an option for the highest of high risk industries – those that deal with high chargeback rates, risky industry types and low volume.
Most of the people need to understand the difference between an aggregated merchant account and a dedicated merchant account. It is a typical question merchant asks before consenting to any merchant account arrangement for the first time. Understanding the difference helps organizations in picking the right payment gateway and merchant account solution.
Before we understand the difference lets first examine why they are required.
In past, people had constrained aspirations, and they were essentially agreeable in doing the business by utilizing cash as a reliable method of payment processing. Entrepreneurs used to gather cash after every sale and later they used to deposit the funds to the business bank account.
At present, there are many card associations and payment service providers. These payment service providers enable organizations to acknowledge credit cards. Merchants would now be able to acknowledge payments in-store and also online. We all know that making an online store is quite easy nowadays.
With the assistance of credit card processing accounts, merchants can generate high volume sales. Merchant service plays a vital role in the development of any organization and more or less “without a reliable payment processing choice it’s difficult for any association to be competitive”.
Merchants over the globe are diverting towards digital payments, and this pattern wouldn’t stop. Governments in developing economies are likewise demanding entrepreneurs to begin utilizing credit card processing options. With this governments can quickly get more understanding of financial transactions at micro and macro levels.
The essential requirement for a reliable merchant account provider alongside the push from governments and financial Institutions have made an inclination among the merchants to get associated with payment processing organizations. At the point when a merchant begins using a payment processing account, at that point accomplishing high sales figures turns into much simpler. It additionally helps in maintaining regular cash flow.
A MID is an acronym for Merchant Identification Number. A Direct MID merchant account is issued to a business that has high volume and low chargebacks. Approved merchants will receive a custom descriptor and the account is uncapped allowing the merchant to process unlimited volume. Direct merchant accounts are known as MID’s (Merchant Identification Number). Merchant Acquiring Banks approve and assign MID’s themselves to certain businesses. These merchants will then get a special and private Merchant Identification number (MID). Unlike aggregate accounts, MID’s are set up by a PSP. Direct accounts are harder to get approved and set up fees can be expensive. The merchant usually requires high volumes and low charge backs in order to get a direct MID. In exchange, the approved merchant will get a custom descriptor. A direct account is a way to go as the merchant does not have to worry about other bad merchants affecting them. Unfortunately, direct MID’s can be much harder to get than aggregates in high risk.
This is an account that the account provider has exclusively established for the merchant. A “Dedicated” merchant account is pretty much like your own internet-based bank account set up intentionally for your online business. In the event that you wish to make an account with a payment gateway then you are qualified for a merchant account.
With a dedicated merchant account, a retailer can talk about tailored rates for their company’s sales. The rates normally rely upon how much in sales volume you and the kind of items you sell. Therefore, a dedicated merchant account has authority over your money. At iPayToTal, we give merchants a business dedicated merchant accounts after an intensive check of their background. We guarantee 100% security before offering a retailer a dedicated account.
An Aggregate or AGG is a merchant account that is shared with a group of other merchants to hedge the risk and managed by a third party. An AGG works out well for merchants that are unable to qualify for MID by not meeting volume requirements or has a history of high chargebacks. The underwriting for an AGG is very liberal and quick. The merchant will receive a generic descriptor and like the MID the account is uncapped and unlimited on volume. It is very common for a merchant to start off with an AGG and move to a MID after getting established. PayPal & Stripe are examples of gateways that provide aggregate merchant accounts to their retailers. The disadvantage with aggregate merchant accounts is that they have less control over the period the money takes to complete the transaction process.
These merchant accounts are also known as Third Party Payment Aggregation or in other words, TPPA. These merchant accounts are best for merchants who have lower volumes and hard-to-find-a-place business. Because of the difficulty and expensive cost of getting a direct high-risk MID, some merchants only have the option of an aggregate account.
Third party accounts are for merchants that have difficulties maintaining their own merchant accounts or have consistently high chargebacks. These merchants share an account within a large merchant portfolio until they are mature enough or have enough credit card processing history to obtain their own merchant account number. Merchant discount rates are favorable within this portfolio because the account is protected from chargebacks and high credit card processing volume within the merchant portfolio. Third party merchant accounts are for the following types of merchants:
An aggregator account is a merchant account with a payments provider acting as the main merchant and the payments provider’s customers acting as sub merchants of that account. By having an aggregator account underneath a payment provider, the payment provider takes on a greater risk since they are the merchant on record.
Aggregator accounts are fantastic for small to medium-sized businesses. They tend to have lower or no set-up or monthly fees, so sub merchants only pay when they process payments. With Bambora PSP merchants have a blended rate that allows them to pay one flat rate instead of paying multiple rates based on card type.
Even though these two types of merchant accounts differ in certain areas, they’re also similar in a way. Not everyone can get Direct Merchant Accounts as you need a bank that offers them. However, if you manage to get this type of merchant account, it’ll be better for you as you get more freedom. Otherwise, you’ll end up with Aggregate Merchant Accounts, which are quicker to set up but with risks involved. All in all, the final choice is yours, so choose accordingly.
iPayTotal offers and provides both Direct MID’s and AGG Accounts which gives us the abilty to set up and open an account no matter what your situation is, as long as the business is legitimate and legal we can get you approved. To begin the process please complete our contact form and one of our Account Managers will reach out to you within 24 hours to learn more about your business and discuss the best available option.
Visit iPayToTal to get the best offers in the market, regardless of whether you run a generally low-risk or the feared high-risk business. We have a solution for each sort of industry, and our plans are adjustable to meet each retailer’s particular needs.