Digital Transactions - April 2014 - (Page 16) Acquiring April 2014 digitaltransactions How Merchant Aggregators Are Shaking Up Payments Peter Lucas Merchant aggregators are leading the charge to simplify merchant on-boarding and add value to payment technology. Can traditional ISOs catch up? I t's only been a few years since Visa Inc. and MasterCard Inc. relaxed their rules to officially recognize merchant aggregation, but in that short time the aggregator model has spread rapidly across the payments landscape. Aggregators' ability to simplify the account-application process and package with their core technology easy-to-install payment solutions that merchants can white-label has been an unequivocal hit, especially with micro-merchants. Consequently, aggregation is no longer the dirty word it once was in some circles of the payments world. But then again aggregators have been misunderstood entities, since they don't service the same kind of merchants that independent sales organizations do. In its most basic form, aggregation involves the processor or specialty provider standing in as the merchant of record for card transactions generated by its micro-merchant clients ("The Rise of Merchant Aggregators," April 2013). Overlooked Merchants Micro-merchants are a different breed of payment card acceptor with different needs from those of traditional storefront and card-not-present merchants. 16 * digitaltransactions * April 2014 The prototypical micro-merchant is an individual who sets up shop in an online marketplace or has a booth at a fair and views himself less as a merchant and more as someone who needs to accept credit and debit cards to facilitate a sale to another individual. Micro-merchants want fast, frictionless setup. The more hoops they have to jump through to obtain a merchant account, the more difficult it is to integrate payment solutions into their store, and the more steps their shoppers have to take to complete a card payment, the less likely they are to buy into the traditional ISOacquirer model. "The Internet and mobile technology have made it so much easier for merchants to set up shop and market their business that the model ISOs have used to sign and service merchants is changing fast," says Jareau Wade, co-founder and vice president of growth for San Francisco-based Balanced Inc., an aggregator specializing in online marketplaces. "Aggregators are allowing new merchants to accept payments that a lot of ISOs and banks would have otherwise overlooked." Indeed, most micro-merchants don't even appear on ISOs' radar because they are too small. That's ironic since ISOs were created to reach the small businesses that merchant acquirers' direct sales forces couldn't. Nor do most micro-merchants even know how to go about finding an ISO or acquiring bank. Those that do are usually so put off by the extensive application and credit-screening process that they set out in search of a less cumbersome way to obtain a merchant account. But most telling as to why aggregators are thriving when it comes to servicing micro-merchants is that they typically provide a core technology such merchants need to get their businesses up and running, such as Web-site design or access to an online marketplace where consumers can discover them. "Aggregators are technology companies that see payments as a way to add value to their solutions, which is something ISOs and acquirers have been challenged to do," says René M. Pelegero, president and managing director of Woodinville, Wash.-based Retail Payments Global Consulting Group. "Prior to aggregation, merchants had to have separate relationships with acquirers and their technology suppliers, which could be cumbersome for small merchants to manage. Aggregators simplify it by putting it all together under one umbrella." Intuit Inc.'s QuickBooks Payments, for example, allows small businesses to accept payment on a purchase or Table of Contents for the Digital Edition of Digital Transactions - April 2014 Transactions - April 2014 Contents The Gimlet Eye: Data Security's Weak Link Trends & Tactics Acquiring: How Merchant Aggregators Are Shaking up Payments Acquiring: A Smoky Incongruity Cover: The Googleization of the Traditional ISO Opinion & Analysis: The Furious Battle to Control Tokenization Components: A Dongle Do-over Endpoint: Why PCI Is Winning Digital Transactions - April 2014 http://www.nxtbook.com/nxtbooks/dt/201706 http://www.nxtbook.com/nxtbooks/dt/201705 http://www.nxtbook.com/nxtbooks/dt/201704 http://www.nxtbook.com/nxtbooks/dt/201703 http://www.nxtbook.com/nxtbooks/dt/201702 http://www.nxtbook.com/nxtbooks/dt/201701 http://www.nxtbook.com/nxtbooks/dt/201612 http://www.nxtbook.com/nxtbooks/dt/201611 http://www.nxtbook.com/nxtbooks/dt/201610 http://www.nxtbook.com/nxtbooks/dt/201609 http://www.nxtbook.com/nxtbooks/dt/201608 http://www.nxtbook.com/nxtbooks/dt/201607 http://www.nxtbook.com/nxtbooks/dt/201606 http://www.nxtbook.com/nxtbooks/dt/201605 http://www.nxtbook.com/nxtbooks/dt/201604 http://www.nxtbook.com/nxtbooks/dt/201603 http://www.nxtbook.com/nxtbooks/dt/201602 http://www.nxtbook.com/nxtbooks/dt/201601 http://www.nxtbook.com/nxtbooks/dt/201512 http://www.nxtbook.com/nxtbooks/dt/201511 http://www.nxtbook.com/nxtbooks/dt/201510 http://www.nxtbook.com/nxtbooks/dt/201509 http://www.nxtbook.com/nxtbooks/dt/201508 http://www.nxtbook.com/nxtbooks/dt/201507 http://www.nxtbook.com/nxtbooks/dt/201506 http://www.nxtbook.com/nxtbooks/dt/201505 http://www.nxtbook.com/nxtbooks/dt/201504 http://www.nxtbook.com/nxtbooks/dt/201503 http://www.nxtbook.com/nxtbooks/dt/201502 http://www.nxtbook.com/nxtbooks/dt/201501 http://www.nxtbook.com/nxtbooks/dt/201412 http://www.nxtbook.com/nxtbooks/dt/201411 http://www.nxtbook.com/nxtbooks/dt/201410 http://www.nxtbook.com/nxtbooks/dt/201409 http://www.nxtbook.com/nxtbooks/dt/201408 http://www.nxtbook.com/nxtbooks/dt/201407 http://www.nxtbook.com/nxtbooks/dt/201406 http://www.nxtbook.com/nxtbooks/dt/201405 http://www.nxtbook.com/nxtbooks/dt/201404 http://www.nxtbook.com/nxtbooks/dt/201403 http://www.nxtbook.com/nxtbooks/dt/201402 http://www.nxtbook.com/nxtbooks/dt/201401 http://www.nxtbook.com/nxtbooks/dt/201312 http://www.nxtbook.com/nxtbooks/dt/201311 http://www.nxtbook.com/nxtbooks/dt/201310 http://www.nxtbook.com/nxtbooks/dt/201309 http://www.nxtbook.com/nxtbooks/dt/201308 http://www.nxtbook.com/nxtbooks/dt/201307 http://www.nxtbook.com/nxtbooks/dt/201306 http://www.nxtbook.com/nxtbooks/dt/201305 http://www.nxtbook.com/nxtbooks/dt/201304 http://www.nxtbook.com/nxtbooks/dt/201303 http://www.nxtbook.com/nxtbooks/dt/201302 http://www.nxtbook.com/nxtbooks/dt/201301 http://www.nxtbook.com/nxtbooks/dt/201212 http://www.nxtbook.com/nxtbooks/dt/201211 http://www.nxtbook.com/nxtbooks/dt/201210 http://www.nxtbook.com/nxtbooks/dt/201209 http://www.nxtbook.com/nxtbooks/dt/201208 http://www.nxtbook.com/nxtbooks/dt/201207 http://www.nxtbook.com/nxtbooks/dt/201206 http://www.nxtbook.com/nxtbooks/dt/201205 http://www.nxtbook.com/nxtbooks/dt/201204 http://www.nxtbook.com/nxtbooks/dt/201203 http://www.nxtbook.com/nxtbooks/dt/201202 http://www.nxtbook.com/nxtbooks/dt/201201 http://www.nxtbook.com/nxtbooks/dt/201112 http://www.nxtbook.com/nxtbooks/dt/201111 http://www.nxtbook.com/nxtbooks/dt/201110 http://www.nxtbook.com/nxtbooks/dt/dt_201109 http://www.nxtbook.com/nxtbooks/dt/201108 http://www.nxtbook.com/nxtbooks/dt/201107 http://www.nxtbook.com/nxtbooks/dt/201106 http://www.nxtbook.com/nxtbooks/dt/201105 http://www.nxtbook.com/nxtbooks/dt/201104 http://www.nxtbook.com/nxtbooks/dt/201103 http://www.nxtbook.com/nxtbooks/dt/201102 http://www.nxtbook.com/nxtbooks/dt/201101 http://www.nxtbook.com/nxtbooks/dt/201012 http://www.nxtbook.com/nxtbooks/dt/201011 http://www.nxtbook.com/nxtbooks/dt/201010 http://www.nxtbook.com/nxtbooks/dt/201009 http://www.nxtbookMEDIA.com
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