BARCELONA – The CEO of Internet payment service provider Cashtronics is warning against the dangers of merchant aggregation.
According to Cashtronics Chief Executive Carl Buchalet, too many merchants risk their time, money and reputation with an Internet payment service provider (IPSP) that is illegally aggregating merchants.
"A merchant should take the time to find out as much as possible about the IPSP they operate with or plan on working with," he said.
"These days, merchants too often focus on the bank rates offered rather than the reputability of the IPSP, the security of their transactions and the problem of merchant aggregation," Buchalet added. "One of the most important things to find out about an IPSP 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 occurs 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 puts a merchants business at risk.
When -- not if -- an IPSP is caught aggregating, the consequences 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 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, which could be bankrupt by then.
"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," stated Buchalet.
Also, he suggests asking your Internet payment service provider the following questions could save your company from potentially serious
problems:
-Are they PSP PCI-DSS 1 certified?
-Do you receive your own merchant account?
-Do you sign a contract directly with the bank?
-What will the descriptor say on the client’s credit card statement?
(Will it be your company or the ISPS name? -- in which case they may be
aggregating)
-Who is wiring you the funds -- the IPSP or the bank? (Whoever is handling your funds must be in good financial health)
Cashtronics said when looking for an IPSP if the application process is easy, there is likely something wrong; Solid and forthright Internet payment service providers will require a diligent compliance process before supplying a merchant account to an individual merchant.
With its online payment system, Cashtronics is a leading company in Europe, specializing in processing payments for high-risk merchants through a secure (PCI compliant, Level 1), flexible and cost-effective payment solution. The company provides individual merchant accounts with highly competitive industry rates starting as low as 3.5 percent.
For more information, contact Carla Arguelles, [email protected].
For bank rates, visit the company's dedicated page.
The firm may be found at Cashtronics.net, Cashtronics.fr, Cashtronics.es and Cashtronics.de.
