

Ask HN: Becoming a credit card "aggregator" or avoiding it? - staunch

I want to process credit card payments on behalf of other companies. How can I do that legally? Do you always have to become an aggregator? Is hard and/or expensive to become one?<p>If I wanted to create my own version of Authorize.net, what's the cheapest/easiest/fastest/legal way I could do it?
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pmikal
Third party payment aggregation is neither cheap nor easy. The card
associations do not at all like it and if you are able to find someone to
underwrite your business, your pricing will be many percentage points higher
than cost.

More importantly here, people aren't understanding your question....

Authorize.net is not a merchant acquirer, but a gateway, which is just hosted
software. You do not need to get a merchant account to compete with Authorize.
What you will need to do is write the transaction processing software, ie the
gateway, and connect it with the various networks that banks have provide
access to Visanet, etc.

I wouldn't trust a guy in a garage with my merchant account unless there was
some money behind it. And if there is some money behind this and you are
serious about doing this, I can help you get this done. PM me on my website -
check my profile. If not, no worries and good luck...

I just read this great quote from Glenbrook Payments:

"It is hard to overestimate the depth of ignorance about card processing."

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callmeed
We do this with one of our products (nextproof.com). We process print orders
on behalf of photographers, take a %, then disburse funds to photographers on
a weekly basis if their balance is > $100. Most transfers are done via ACH but
we do mail checks to a small number of people.

We use BrainTree for all this and they were very helpful. The technical terms
they used for this was "third party payments aggregation". Because this is
riskier for them, our account had to be underwritten by a different company
than they normally use. Also, a portion of our funds are held in reserve for
an additional 30-90 days (I can't recall).

Anyway, if what I described is what you want to do, yes its possible and
legal. Just make sure you cover all your bases with good terms/policies. Tell
BrainTree what you want to do and I'm sure they will help you out.

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ahizzle
I don't suppose you would know who offers a similar sort of service for
Canadian based companies...?

~~~
callmeed
No, sorry ... we actually had a real hard time when we started moving towards
international/multi-currency payments. We ended up having non-US customers use
PayPal for the time being.

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jacquesm
Sign up with an IPSP, this is one of those things you really do not want to do
yourself. The demands that VISA/MC and so on place on you if you want to do
your own processing are so high that it really doesn't pay off if you roll
this just for your own site.

And if you do roll it yourself get out of whatever business you are in and
become an IPSP!

Try to find an IPSP that uses 'segregated merchant accounts', in other words
find one that makes each of their customers responsible for their own
chargebacks and credits instead of putting them all in the same bin.

The sign up process for such an IPSP will be a bit more involved but you can
expect them to stick around instead of becoming the next IBill or DMR (both of
which went down in flames taking a lot of their customers with them).

Another upside to having your own merchant account is that there is no
'holdback' other than the 14 days or so it takes VISA/whoever to do the
deposit.

This is a very important difference because it will limit your exposure in
case there is a problem, as well as make a material difference in your cash
flow.

\- edit, some more arguments against being your own aggregator:

1) you don't store peoples credit cards / expiries / cvv / other info of
interest

2) this means you are less of a target for hackers

3) you are also less likely to be embarrassed by some employee walking out
with all that sensitive info

4) you will not have to go through the auditing that comes with storing such
information

