The merchant acquiring space is likely to see more Independent Sales Organizations acting as merchant aggregators for mobile merchants and other small businesses. Merchant aggregators consolidate activity from multiple merchants under one merchant account. One example of this business model includes Square, which acts as the merchant of record for Square users. Another example is PayPal’s original digital wallet product for use on EBay and at other merchants, which can be settled against a consumer’s bankcard account. Google Wallet (and Checkout) and Amazon’s Click-to-Buy work in much the same way. A story today in ISO&Agent indicates that some ISOs seem to already have moved in this direction:
ISOs apparently aren’t content to stand by and let the big tech companies dominate the new market for micromerchant electronic payments.
Instead, at least a few ISOs are getting into the business of merchant aggregation, just like Square, PayPal, Google and Amazon. In effect, the tech companies or ISOs become the merchant in the eyes of the card brands, while the gardener, pool cleaner or babysitter becomes a submerchant.
Aggregation benefits small retailers that want to avoid the hassle or cost of signing up as merchants with the card brands, one observer says.
Many of those merchants are accepting card payments for the first time because it’s become practical with recently introduced readers on smartphones or electronic tablets.
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