Payment aggregators: definition, types, operation and advantages

Payment aggregators emerged with the rise of fintech and the growth of electronic transactions, modernizing financial services for small and large businesses around the world.

Today, they are key for businesses to offer secure and flexible payment methods - read on to learn how to choose the best one for your business!

What is a payment aggregator? 

A payment aggregator, or payment service provider (PSP), is a platform that acts as an intermediary between the merchant, the payment network, payment systems and financial institutions. 

These providers facilitate the acceptance of different payment methods, such as debit cards, credit cards, transfers or digitalwallets, cash in stores or banking correspondents, among others.

In Mexico, the number of terminals operated by aggregators and non-bank acquirers has increased, as they simplify and diversify the payment process, benefiting both merchants and consumers.

Differences between payment aggregators, traditional payment gateways and payment processors

Payment gateways, processors and aggregators are indispensable elements for the acceptance of payments in the commercial industry. Therefore, knowing and distinguishing each one is important to choose the most suitable for your business.  

• The payment gateway is only responsible for transmitting the customer's card data to the payment processor. 
• While the processor is only in charge of authorizing the transaction and moving the money from the bank accounts.
• The payment aggregator, on the other hand, combines all of these functions into a single platform, making integration easier. 

Types of paid aggregators

There are several payment aggregators and they are classified according to different criteria that facilitate the right choice for each business. Below are some types of payment aggregators: 

1. According to the payment channel they provide

Aggregators are differentiated by the channel through which they process payments, whether online, face-to-face or a combination of both:

• Online aggregators (e-commerce): are designed for e-commerce and allow to process electronic payments in a secure and fast way. 
• Face-to-face aggregators (points of sale): operate in physical points of sale, facilitating face-to-face transactions.
• Mixed aggregators: combine both modalities to offer a comprehensive and adaptable solution to different business needs.

2. According to the form of payment they concentrate on

Another way to classify aggregators is by the payment options they accept on their platform:

• Card aggregators: focused exclusively on credit and debit card payments.
• Multi-payment aggregators: accept a wide variety of methods, including digital wallets, bank transfers, among others.
• Specialized aggregators: dedicated to specific niches, such as payments in specific industries or digital currencies.

3. According to scope and model

Finally, aggregators can be classified according to their scope of operation and business model:

• Local: they offer services adapted to regional markets and regulations.
• Global: capable of managing international transactions with multiple currencies and support in different countries.

How do paid aggregators work?

Understanding how a payment aggregator works is key to taking full advantage of its benefits. The following is a step-by-step explanation of how these services operate to facilitate business transactions.

Contracting and integration of the aggregator

The company interested in accepting payments through an aggregator contracts its services and integrates its website or e-commerce platform with the aggregator's platform. 

This integration is usually done through an application programming interface(API) or with plugins that are easily added to e-commerce systems or retail applications. This allows the site to accept payments without the need to develop a complex system of its own.

Customer's choice of payment method

When a customer makes a purchase, they have the option to choose between different payment methods provided by the aggregator. This may include credit or debit cards, bank transfers, e-wallets or even cash payments made at physical store partners. 

This variety enhances the user experience and offers the payee greater flexibility and convenience.

Transaction processing and validation

Once the customer selects the payment method and performs the transaction, the aggregator is responsible for processing the transaction. This involves validating the information with the issuing bank or financial institution to ensure that the transaction is legitimate and secure. 

The aggregator verifies that funds are available and that the transaction is risk-free, which protects both the merchant and the buyer.

Receipt of funds by the merchant

Upon approval and successful processing, the purchase money is transferred to the merchant or business. The payment arrives to the designated account, with the aggregator's commission already automatically deducted. 

In this way, the business receives its revenue without having to directly manage collection with multiple banks or payment systems, which simplifies financial management.

What are the advantages of using a paid aggregator?

Using a payment aggregator brings numerous benefits for businesses, especially for those seeking to optimize their collection processes. Among the main advantages are:

• Access to multiple payment methods: from credit and debit cards to payment links, and more, without the need for individual integrations for each method. This expands payment solutions for customers and increases the likelihood of sales.
• Quick integration: the implementation of an aggregator is fast and simple, ideal for small and medium-sized businesses that do not have large technical resources.
• Less banking procedures: aggregators handle much of the bureaucracy and processes with different financial entities, which frees the merchant from managing multiple contracts or individual procedures.
• Simplicity: instead of dealing with multiple payment gateways or platforms, the merchant connects to a single system, which facilitates administration and reduces errors in the collection process.
• Cost-efficiency: aggregators usually offer competitive rates and plans tailored to small and medium-sized companies, allowing them to handle reduced payment processing costs.
• Customer confidence and security: they implement advanced security and compliance protocols, which generates greater confidence in buyers and reduces the risk of fraud.
• Risk management: they have systems in place to detect suspicious transactions and minimize losses for both the merchant and the client through automatic analysis and filters.
• Consolidation of reports and payments: aggregators offer centralized dashboards where the merchant can visualize and manage all his transactions in a clear and organized way.
• Specialized technical support: provide assistance to resolve incidents, improving user experience and business continuity.

These advantages make payment aggregators a key tool to facilitate payment acceptance, improve the customer experience and optimize the financial management of any business.

How to choose the best payment aggregator for your business?

Selecting the right payment aggregator is a crucial decision that can directly impact the operation and growth of the business. To make a good choice, several aspects must be considered, such as:

1. Compatibility with your business model

It is essential to analyze how the business operates, including the average ticket sales and the level of mobility required. 

For example, a business with low recurring sales will need an aggregator that optimizes rates for small transactions, while one with high sales or mobile outlets will require flexible solutions that adapt to their specific operations and sales channels.

2. Costs and commissions

It is important to evaluate not only the transaction fees, but also the monthly fixed costs and possible additional charges, such as those related to returns or maintenance. 

Comparing these rates based on expected sales volume will help identify the most cost-effective option for the business, thus avoiding surprises and ensuring proper cost control.

3. Ease of integration and use

Integration must be simple and compatible with other tools used by the business, such as enterprise resourceplanning (ERP) systems, e-commerce platforms or point-of-sale(POS) terminals. 

A streamlined integration process reduces time and costs, while an easy-to-use interface ensures that the team can manage payments smoothly.

4. Security and compliance

The aggregator must have high security standards and international certifications such as PCI DSS and comply with local regulations, such as the supervision of the National Banking and Securities Commission(CNBV) and the Bank of Mexico in Mexico. 

In addition, it must implement effective mechanisms to avoid chargebacks and protect both the merchant and the customer from potential financial risks.

Evaluating these aspects carefully will help in choosing a payment aggregator that not only fits the current needs of the business, but also offers capabilities to grow and adapt for the future.

Payment aggregators are strategic allies for businesses in Mexico, facilitating the acceptance of digital payments in a secure and efficient way. Adopting them is key to stay competitive and adapt to the growth of e-commerce.

With Rebill, turn payment aggregators into the new financial system to optimize payment terminals and grow without barriers.Contact us and we'll tell you how!