CEO of Cashtronics Payment Gateway Warns Against the Dangers of Merchant Aggregation in the Online Payment Industry.

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Too many e-commerce merchants risk their time, money and reputation with Internet payment service providers (IPSPs) that are illegally aggregating merchants.

Merchants should take the time to find out as much as possible about the IPSP they operate with or plan on working with. These days' merchants too often focus on the bank rates offered by the payment provider rather than the reputability of the IPSP, putting at risk the security of their transactions and their capability to accept credit cards on their website.

One of the most important things to find out about an IPSP before signing with them is if each merchant will receive their own merchant account and contract with the bank. If a merchant is not provided with an individual merchant account number there is every possibility that the IPSP is aggregating merchants.

Merchant aggregation is when an IPSP groups many different merchants under one master merchant account. This is illegal under MasterCard and Visa regulations as well as against PCI Compliance rules and can lead to serious consequences for the IPSP, which in turn puts a merchants business at serious risk.

Unfortunately this scenario is not a rarity. If your IPSP is aggregating, it is not a question of IF they will get caught, but rather WHEN, the consequences of which are catastrophic for a merchant. The acquiring bank is given a huge fine which in turn leads them to freeze all the funds in the account and stop any further processing. All the merchants' funds are then held and their capacity to process cards via that IPSP is terminated. These funds may never be recovered or at best, it may be years before the bank actually releases the funds to the IPSP who could be bankrupt by then.

Carl Buchalet CEO of Cashtronics online payment system explains:

"Over the last few years we have seen a sharp increase in the number of merchants coming to us requesting their own legitimate merchant account number after being cut off from Visa and MasterCard through no fault of their own."

Asking an internet payment service provider the following questions could save a merchant from potentially serious problems:

  • Are they PSP PCI-DSS 1 certified?
  • Does each merchant receive their own merchant account?
  • Does the merchant sign a contract directly with the bank?
  • What will the descriptor say on the client's credit card statement? (will it be the merchants company or the ISPS name- in which case they may be aggregating)
  • Who is wiring the funds, the IPSP or the bank? (Whoever is handling the funds must be in good financial health)

Note- When looking for an ISPS if the application process is easy- there is something wrong! Good internet payment service providers will require a diligent compliance process before supplying a merchant account to an individual merchant.

About Cashtronics:

Cashtronics is a leading European based online payment company. Specialized in processing payments for high turnover merchants through a secure (PCI compliant, Level 1), flexible and cost effective payment solution. Provides individual merchant accounts with highly competitive industry rates.


Carla Arguelles


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Carla Arguelles
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