Direct merchant or aggregator account?

One of the most confusing areas for merchants new to eCommerce is the distinction between a direct merchant account and an aggregator account.

A direct merchant account is where a merchant has an account directly with an acquirer in their own name normally utilising the value added services of a gateway provider such as IPGPAY. Under this model, the acquirer has a direct contractual relationship with the merchant and assumes the ultimate risk for the merchant’s transactions.

With an aggregator account, an intermediary company sits between the acquirer and the merchant and assumes the ultimate risk of the transaction. Common example of this sort of aggregator intermediary is PayPal, Stripe, Square Google Checkout and Amazon Payments.

So generally, what type of account is best for what sort of merchant?

Aggregator accounts are great choice for start up businesses or for merchants doing smaller volumes. Because the aggregator is assuming the ultimate risk signing up is normally very straightforward without too much due diligence and little or no credit assessment. Because of the assumption of risk an aggregator account most often comes with higher fees and lower levels of flexibility and tighter controls so many smaller merchants eventually “outgrow” an aggregator account and go looking for an alternative in the form of a direct merchant account.

A direct merchant is normally best suited for medium to large merchants doing higher volumes. In order to obtain a direct account, the merchant must have a good trading history, financial statements and be prepared to undergo Know Your Customer (KYC) and a credit and risk assessment. With the direct merchant account comes greater flexibility and lower fees.

So in short, if you are a small or start up company then an aggregator account is a great option to kick off your eCommerce business. If you are a growing merchant with a proven track record then a direct account is your “next step” alternative to an aggregator account.

IPGPAY specialise in merchants looking for a direct merchant accounts. We provide:

  • A choice of easy integration options
  • Bank grade security
  • Highly competitive pricing
  • Boutique customer service
  • A focus on, and intimate understanding of, the unique needs of online businesses in Asia-Pacific.
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