Merchant Account Aggregation
Merchant account aggregation is when several merchants are grouped by a credit card payment service provider under a master merchant account. It may afford service providers with a way of offering cut-rate service, but is actually against Visa and Master Card rules and is not PCI compliant. Merchants who hold accounts with an aggregator can find their service suspended with no explanation if credit card companies discover that accounts are being aggregated. There is actually no question that the credit card payment service provider will be caught if they are aggregating; it is only a matter of time. Banks participating in aggregation can receive huge fines, and the funds in an aggregation account are frozen making it unlikely that the balance of the merchant accounts can be recovered.
Merchant account holders should suspect that their account is being aggregated if they do not receive an individual account number from the payment service provider. It does not really matter how low the rates and fees are since there is a very good chance that the merchant account will be suspended and any funds will be frozen and unrecoverable at some point during the operation of the account. It also complicates dealing with charge-backs, refunds, and fraud since the descriptor on credit card statements may not clearly identify an individual merchant. If the fees seem too low and the application process is too easy, it is possible that the payment service provider is aggregating. Merchants should always screen payment service providers for PCI-DSS certification and ensure that part of the application process involves signing a contract directly with the acquiring bank; merchant account holders should also be certain that their unique identifier is used on statements and not that of the payment service provider. If the preceding requirements can not be met, then it is likely that the merchant account provider is aggregating.
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