For businesses across various sectors today, knowing about the concept and working of a payment aggregator is crucial. Cash payments are fast fading out of the picture. Digital and contact-free payment modes like QR code scanning, UPI, and e-wallets have gained massive popularity.
In the aftermath of the Covid-19 pandemic, credit-based payments like BNPL (Buy Now, Pay Later) are also in high demand. Retailers, in particular, are keen on buying POS systems that provide BNPL, Debit Card EMI, and Loyalty Points Integration. So irrespective of whether your business model is online, offline, or hybrid, collaborating with the right payment aggregator is essential.
Who is a Payment Aggregator?
A payment aggregator is a third party that collates and provides multiple payment acceptance modes to business owners. It is tedious and expensive to approach each payment service provider individually if you own a business.
You will have to apply for and open merchant accounts in different banks, negotiate with card companies, digital wallet service providers, and so on. Business owners can avoid this time-consuming and complicated payments integration at multiple touch-points altogether by liaising with a payment aggregator.
Do Payment Aggregators facilitate Online or Offline Payments?
A payment aggregator provides full-fledged payment solutions for online firms and brick-and-mortar establishments. Additionally, businesses that thrive on online, offline, and on-site/on-the-go payments can also benefit from payment aggregators.
When multiple payment modes get combined under one umbrella, it becomes easier to cater to diverse customer payment preferences. It also helps you target new market segments without mobilizing too many resources on the payments front. Based on the payment aggregator’s competence and the type of service/plan you choose, the following payment modes are available:
- Credit Card and Debit Card Payments
- Internet Banking
- UPI and Aadhaar Pay
- E-Wallet Payments
- NEFT and RTGS Transactions
- Cheque Payments
- Remote/SMS payments
- Scan and Pay/Biometric Transactions
- On-site/Kiosk/On-the-go Payments
Understanding the Key Role of a Payment Aggregator:
- A payment aggregator’s role is to act as an intermediary and facilitator between the merchant and the customer. Ensuring secure, smooth, and hassle-free payments is the key motive.
- It also adds an interface layer between merchants and multiple payment service providers. It enables merchants to register for and avail of different payment services in one go. This includes banks, NBFCs, credit card companies, digital wallet companies, payment gateways, and so on.
- Essentially being a payment provider, a payment aggregator has to comply with the latest payment security standards. Their competence is reflected in ensuring that the interface is seamless and safe with a wide payment acceptance range.
How does a Payment Aggregator function?
The step-wise functioning of a payment aggregator can be summarized as follows:
- As soon as the customer card/payment details are received, encryption and routine fraud checks occur.
- The encrypted details are passed on from the acquiring bank to the issuing bank. This is routed through the merchant account created by the payment aggregator.
- Alternatively, the details are forwarded to the card network/digital payment network via the payment aggregator’s processor.
- Based on the payment mode, the acquirer approves the payment. The transaction is complete when funds are transferred from the payment aggregator’s merchant account to the acquirer’s account.
Is a Payment Aggregator Different from a Payment Gateway?
Many entrepreneurs get confused between the working of a payment aggregator and the working of a payment gateway. Both are separate entities. While a payment aggregator is a service provider collating multiple payment services, a payment gateway provides the technical wherewithal for the same. Whichever modes of payment you want to provide your customers, a payment gateway is a software that routes the same. Therefore, the significance of a payment gateway is limited to e-commerce sites as a software/platform facilitating payments.
Types of Payment Aggregators:
There are primarily two categories of payment aggregators:
- Payment Aggregator Service provided by Banks: This is the initial type of payment aggregator service that was available in India. While these services are highly secure, the issues of high initial investment and low customization prevail.
- Private Payment Aggregator Services: In the wake of the e-commerce boom, many third-party payment aggregators are providing cost-effective and customized services for start-ups. Provided you choose the right payment aggregator, the benefits are efficient, trustworthy, and flexible.
Advantages of Payment Aggregators:
Of course, the biggest advantage is spearheading the complex role of integrating different payment services into a single solution. For business owners, here are the other benefits of collaborating with the right payment aggregator:
- Assists in Onboarding and Setting up Your Sub-merchant Account: Nowadays, the application, KYC, and other onboarding paperwork can take place online. You no longer have to stand in bank queues or engage in tedious formalities.
- Payments Security: Liaising with the right payment aggregator will ensure comprehensive fraud prevention and stringent security compliance.
- Eases out Customer Refunds: Customers no longer want to wait for 7-10 days for refunds to reflect in their accounts. A payment aggregator reduces this span considerably, thus nipping customer issues in the bud.
- Immediate Settlement: You no longer need to wait on account of long holding periods. Today, a good payment aggregator will always ensure that funds are immediately credited to your account.
- Minimal Downtime: Direct collaboration with banks/card companies doesn’t guarantee a smooth interface. On the other hand, a payment aggregator’s interface is highly prompt and responsive with minimal downtime.
Conclusion
With the first introduction of digital payments in India, e-commerce businesses were the first to understand the working of payment gateway. Online businesses purchased and installed payment gateways to facilitate and route customer payments securely. Over the years, the popularization of the Digital India Campaign and the benefits of digital payment solutions have enabled a great impetus to cashless transactions.
Furthermore, the Covid-19 pandemic has ushered in a new wave of contactless payments, now accepted widely by small and mid-sized businesses. With their all-encompassing merchant payment services, payment aggregators assist businesses in adapting seamlessly to the current dynamic payments scenario. It is a win-win situation for both customers and business owners. Customers get to choose from a wide variety of payment options. Yet it doesn’t require herculean efforts on the part of merchants to provide the same!
Santosh Kumar is a Professional SEO and Blogger, With the help of this blog he is trying to share top 10 lists, facts, entertainment news from India and all around the world.