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Payment Aggregators

Aggregators allow merchants to accept credit card and bank transfers without having to setup a merchant account with a bank or card association.


Payment aggregators, such as PayPal, are very popular amongst online shoppers because they offer both convenience and security as consumers can store their credit card information with one payment provider rather than disclose it to every merchant where they shop.

In general payment aggregators are the most popular, convenient, safe and trusted alternative payment providers in the online marketplace. The rate of adoption around the world has been tremendous and some payment aggregators have developed extremely strong brands. Some payment aggregators have become more regionalized through strategic alliances and mergers in order to better address merchant and customer needs within an area. This payment alternative is suitable for small to large merchants and for those merchants who may have difficulty establishing a merchant account with a bank. Each of these payment aggregators serve merchants in different ways and its important to know these differences and to evaluate your choices accordingly.

Pros and Cons of Payment Aggregators Include:

It's easy to implement

Provides easy access to cross border markets

Gain access to large customer segments (increased sales conversion)

Provides access to credit and debit cards (if setting up a direct credit card merchant account was too expensive)

May or may not guarantee against fraudulent charge backs

It has recently become more expensive to utilize these methods


Alternative Solutions - ACH payments and credit cards are the most popular form of alternative payment solutions to payment aggregators. However, there are an increasing number of users and merchants that want to utilize payment aggregators for access to online marketplaces and their loyal customer bases.

Estimated Costs - Costs will vary based on the vendor you select. However, the fees that are associated with payment aggregators is typically slightly above credit cards. Monthly fees, merchant account costs and interchange fees are all part of the payment aggregators' cost structure. Many of these payment aggregators do provide a guarantee on fraudulent charge backs.

Vendors - PayPal, Google Checkout, Amazon Payments and several others

Merchant Aggregators or Payment Aggregators are service providers through which e-commerce merchants can process their payment transactions. Aggregators allow merchants to accept credit card and bank transfers without having to setup a merchant account with a bank or card association. The aggregator provides the means for facilitating payment from the consumer via credit cards, stored value accounts or bank transfer to the merchant. The merchant is paid by the aggregator. These services are the most popular forms of payment behind credit cards.

Payment aggregators typically hold consumer credit card information to allow for faster purchases or hold money in an account to allow for future purchases. Firms such as PayPal, Google Checkout and Amazon Payments differ in their payment aggregator approaches, costs and services delivered to merchants. These alternative payment options have made aggressive moves into further establishing themselves as market leaders. Merchants must thoroughly analyze the costs and benefits associated with each provider to ensure they obtain the best payment solution.

Key considerations when implementing or buying this functionality include:

  • Make sure you understand what your costs are for the services, as some of these options can be significantly higher than direct credit card payments.

  • There are typically 2 driving forces to implementing one of these services; (1) You need a way to process payments because you can't do it today. In this case you need to focus on what the service supports, regions, payments types and customer base. (2) You are trying to increase your sales by implementing a preferred payment method option. In this case the "brand" of the payment aggregator is very critical. It is not enough that a service provider simply works in a country of interest, it needs to have the mindshare in the region to be effective.

  • Make sure you fully investigate any fraud guarantees and the dispute process.


Payment aggregators have gone to great lengths to distinguish themselves and differentiate from other alternative payment providers. PayPal, Google Checkout and Amazon Payments have all gone different routes to satisfy merchants and consumers around the world. For example, Paypal effectively "holds your money" so at any time you can purchase an item, while Google Checkout holds your credit card information to make purchasing online easier and more efficient. Amazon charges higher fees than both these payment services but effectively acts as a marketplace with a tremendous customer base. Merchants can then save cost on marketing and web site development by utilizing Amazon.

There are just a few of the dominant payment aggregators but several others have proven themselves successful in other regions around the world. As this industry further develops there will be new entrants that will deliver value to the merchant and consumer.

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