As a new business owner, you’re tasked with handling a minefield of payment complexities. You need to accept payments in a number of ways, particularly in their electronic and online forms, and you need to manage those payments through business accounts.
Historically this has been quite a manual, complex and disjointed process, in which you negotiate with banks, card providers and other financial institutions. You then need to source all the necessary hardware and software to accept your preferred forms of payment and organise a merchant account with your bank.
Or you could go another way: find a third-party payment service provider (PSP), otherwise known as a merchant aggregator or payment aggregator.
In this article, we’ll be taking a closer look at this new form of service provider. What is a payment aggregator? How does payment aggregation work? And why should a small business choose this path?
What is a payment aggregator?
In terms of a payment aggregator meaning, it is a service that sees all payments flow through a single, centralised merchant account, without the involvement of traditional banks or financial institutions. It condenses the management of all electronic payments into a single online portal. Confinity – later PayPal – was the first to offer such a service back in 1998.
Instead of creating multiple accounts with every bank, card provider, unified payments interface (UPI) and payment type you want to accept, the payment aggregator channels all of your payments through a single master account.
Payment aggregation is a simple, efficient and cost-effective way to accept and manage payments. Able to be set up in minutes, it allows small businesses to get off the ground faster, and able to scale to your needs, it allows established businesses to grow quicker.
Square is one such payment aggregator.
How does a payment aggregator work?
To understand how a payment aggregator works, we first need to understand the system that it has been designed to replace.
Every bank and financial institution, every card and account, every form of electronic payment comes with its own payment gateway. Traditionally a merchant has been required to negotiate the terms of each gateway they want to use with the relevant payment processor. If a business hoped to offer a complete suite of payment options, this could turn into a complex task both in terms of initial setup and ongoing management.
You can think of a payment or merchant aggregator like Square as a middleman that orchestrates and greatly simplifies this process. The aggregator does the work of building relationships and negotiating contracts with payment processors. In essence, the aggregator acts like a merchant, then allows any business to become a ‘sub-merchant’, taking advantage of the payment arrangements that the aggregator has made while avoiding the messiness of payment management.
All payments are channelled through the aggregator, which serves up all relevant payment info via a single, easy-to-understand portal.
4 Benefits of a payment aggregator
Why choose to use a payment aggregator rather than go the traditional merchant route? The reasons are many and varied, but include:
Easy, instant setup: The traditional merchant application process is complex and time-consuming, filled with credit checks, PCI compliance checks, personal guarantees, business model analysis and more. Setup with a payment aggregator, meanwhile, can be completed in mere minutes.
Transparent and affordable: Payment aggregators like Square offer a simple, transparent and affordable fee structure. You know exactly how much you’ll pay for the service – usually a small percentage of each transaction, rather than a flat fee – allowing you to budget better.
Take payment the way you want: Merchant aggregators allow you to take payment however you want. Square, for example, offers the hardware and software to take payments in-person, online, over the phone, and via card, contactless or transfer.
Safe and secure: A payment aggregator’s main focus is to ensure the safety and security of its service. You can trust Square to handle your business’s money and to do so in a fully compliant way.
A payment aggregator example: Square
What does all the above look like in the real world? Let’s take a closer look at exactly how payment aggregation works here at Square.
Square is a payment aggregator designed to make the foundation, management and growth of your business easy. We do so through a complete suite of Square Payments products and services, including payment hardware like:
Accept every payment quickly, easily and securely.
Square Reader: Our original product, first released in 2009, allows any business owner to take card payments via their phone.
Square Terminal: A smart version of the classic EFTPOS machine, card payments have never been easier than with Square Terminal.
Square Register: The world’s first fully integrated POS terminal that can be utilised by any business, Square Register can do so much more than take payments.
We also offer a range of software products and services, including:
Square Online: Our eCommerce solutions make it simple to build a fully functional online store and take payment through it.
Square Virtual Terminal: This solution opens up the world of remote and phone payments by giving your laptop or desktop the ability to process card details.
Square Invoices: Those looking for a complete invoicing and payment solution will find exactly that in Square invoices, which makes business finance management simple.
At Square, we’ve designed our products and services for all businesses. No matter whether you’re a high street retailer, an eCommerce seller, a restaurant or a professional services provider, our suite of solutions can be moulded to suit your needs.
We also put an emphasis on scalability, which ensures your payment services and processes will grow as your business does. No matter how many branches you open, how many investors you bring on board or how many team members you employ, you can be safe in the knowledge that Square will keep pace with and support your growth.
In fact, we can help with a lot more than just payments. Appointments, inventory, team management, marketing, loyalty programs, business loans; at Square we offer a wealth of tools designed to help you get ahead in business.
If you’re ready to simplify the world of business payments with a payment aggregator, our team at Square is ready to help. Get in touch today!