Payment Aggregator - Meaning, Examples and Importance in India

A payment aggregator is defined as a third-party payment service provider (PSP) that processes transactions for their users’ sub-accounts through a single major internet merchant account. This model allows businesses to start their e-commerce easily without the inconvenience of handling separate integrations for each payment mode. By registering with a single aggregator, a merchant gains immediate access to multiple channels — credit and debit cards, net banking, UPI, and bank transfers — without the need for separate accounts in different banks or providers. In some cases, aggregators and fintechs also use open banking APIs to access customer data or initiate payments directly, further simplifying integration. The aggregator acts as a central intermediary, enabling the funds movement through one single account and performing all back-end operations on behalf of the merchant. 

Payment Aggregator Examples

Stripe, Razorpay, PayPal, Square, and India's RazorpayX or Cashfree are modern examples of aggregators. Paykassma is different from these, however, as it is a complete solution in the meaning of payment gateway — providing merchants with an immediate and secure connection to various methods, advanced risk management, and settlement in real time (T+0).

How Does a Payment Aggregator Work?

In order to facilitate several modes — cards, wallets, or UPI — a firm would need to enter into individual agreements with every payment gateway or acquiring bank (see acquirer vs issuer for the distinction). This would be technically inconvenient and time-consuming. Aggregators simplify things by offering pre-integrations with several gateways. Instead of having its own MID, firms are sub-merchants to the parent MID of the aggregator.

Whenever a payment is made by a customer, the aggregator settles the transaction on behalf of the sub-merchant by routing it through its own MID to the appropriate payment processor. Once the funds transfer is confirmed, the aggregator settles the funds into the account of the sub-merchant within a given time period.

Pros and Cons of a Payment Aggregator

What Are the Risks Associated with Payment Aggregators?

When it comes to online financial transactions, there is always a risk. There are hackers out there, and no system is completely secure. A corporation should be continually aware of this before putting material on the internet. There is no way for an aggregator to guarantee total security.

In these cases, the payment aggregator usually gets the underlying bank’s or payment processor’s chosen processing rate. This implies they take on all risks and are financially responsible for the entire portfolio. As a result, they are liable for any chargebacks or transaction fraud involving a sub-merchant.

That’s fantastic news. Small business owners, in particular, should be aware of this. It’s an extra layer of financial security that allows you to sell to your heart’s content while maintaining complete peace of mind.

Do You Need a Payment Aggregator for Your Business?

Companies need to have a payment aggregator if they want to accept payments across different channels — point of sale terminals, online checkout, mobile apps, and subscription platforms. Aggregators enable seamless acceptance of credit and debit cards, UPI, mobile wallets, bank transfers, Buy Now Pay Later (BNPL), and even cryptocurrencies in some geographies without having to install merchant accounts separately with each payment processor.

Bottom Line

Using an automation-powered B2B payment system can help your team save time and money by simplifying complex procedures, automatically tracking transactions to stay audit compliant, and preventing fraud.