Payment Aggregators: Are They the Best Solution for Online Businesses?

No doubt, online transactions are the way to go now.  As shown by Ebay, Amazon, and the like.  But with online transactions come dealing and processing online payments.  How exactly does a webmaster deal with all that?

Paying for Goods and Services Online


One of the first decisions any online merchant has to make is how to collect payments. Whether you’re selling goods or services, you have to provide a payment method that your clients can trust. There are essentially two ways of collecting online payments. Either you can collect the credit card information directly from the customer, or you can use the services of a payment aggregator.


What are Payment Aggregators?

Payment aggregators are simply third-party organizations that handle the entire payment process for you. When a customer wants to buy your product or service, they are redirected to the payment aggregator’s website, where they can create an account and authorize a payment. The payment aggregator holds their credit card or banking information, so that you never see it. In this way, customers can purchase products and services from numerous different online merchants with only one company ever seeing their financial information.


The Most Popular Payment Aggregators

The three most popular payment aggregators today are PayPal, Google Checkout, and Amazon Payments. All three are large companies with a lot of name recognition in the marketplace. Many customers feel safe and secure using the services of these companies. This perception of security is probably the largest benefit that payment aggregators offer. Many customers do not feel comfortable providing their financial information to every merchant they want to purchase from, and prefer to only trust one company with their credit card numbers.


The other major benefit of payment aggregators is ease of use. The payment aggregator handles the entire process, which significantly reduces the amount of work that you have to do as the merchant. You don’t have to worry about what country your customers are living in, or what different credit cards to support, or any other payment details. You can leave those details to the payment aggregator, and get back to working on what you really care about: your business.


Payment Fees and Risks

As you might expect because of these significant benefits, there are some downsides to using payment aggregators. The most apparent one is the cost. Most payment aggregators charge significant transaction fees that can really cut into your gross margin. On top of this, some of them charge monthly subscription fees as well. In addition to cost, there is always a risk when you add a third party to a transaction. The third party adds complexity, and that complexity adds risk.


Receiving Credit Card Payments with Merchant Accounts

The alternative to using the services of a payment aggregator is to simply collect the credit card information yourself. After doing so, you can either use a payment processor like Braintree, or you can process the payment yourself. The latter requires setting up a merchant account, which can be a relatively involved process. Processing payments yourself is often less expensive, but you may lose customers that don’t feel comfortable giving you their credit card number.


Most banks If you do choose to use a merchant account, you must submit an application to your bank. will require some detailed information about your business, such as a product list and information about your return policy. This process takes a lot longer than using a payment aggregator, but the savings can be significant. Many merchants choose to offer both payment methods, so that customers who are comfortable providing their credit card information directly can do so. This way you can keep your costs down while not losing any customers. Merchant account providers must have information on their services readily available on their websites, including any hidden fees when using their services.


So now what?

In the end, there isn’t a clear-cut answer for how to process payments. Different solutions will work better for different businesses. If you prefer to minimize costs as much as possible, it may be worth the extra effort to process payments yourself. However, if the ease of use is worth the additional cost, payment aggregators are a great option.



  1. These days online shopping has gained quite much importance. With this the role of payment aggregators also come in forefront. But here I would like to ask whether finance aggregator is also same as this one.

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