Two different types of businesses handle credit/debit card transactions: Payment Processors and Aggregators.
Payment Processors are primary payment gateways. They are the middleman between main processing banks and vendors. RDS chose Vanco because it is a PCI-compliant gateway. More than 12,000 religious and nonprofit organizations nationwide currently rely on Vanco Services to deliver convenient electronic giving options for their donors.
Aggregators do not do the actual middleman work like a gateway, they are simply the end source on approval or disapproval for payments. A payment aggregator establishes a merchant account and then lets other businesses accept credit card payments and bank transfers on the aggregators account. The payment aggregator facilitates the credit card transaction or bank transfer on behalf of the business. The business is then paid by the aggregator for the completed transactions. PayPal, for example, is a payment aggregator.
Payment aggregation was established as a means of facilitating micro-payments where the overhead of establishing a merchant account didn’t make business sense.
The benefits of using an aggregator’s account to facilitate electronic payments include:
Most aggregators require only simple contact information and rarely require any financial documentation or credit information.
Most of the time the account can be applied for and set up immediately.
Most aggregators have identified a niche market and have simplified their system to accommodate their target market. PayPal’s niche is low volume internet businesses that want a simplified payment processing solution for website stores.
Most aggregators pricing, for facilitating electronic payments, is less expensive than a traditional merchant account for a small volume level. As volumes increase, it generally becomes a no-brainer to switch away from an aggregator when your monthly processing volume is in excess of $5,000 / month.
Drawbacks of using an aggregator’s account to facilitate electronic payments include:
Once your monthly volume exceeds a predetermined level, the cost associated with using a payment aggregator’s service is more than a traditional merchant account. When using Paypal, once you exceed $2,000 a month you are usually better off with your own merchant account. Vanco Services guarantees competitive pricing to your current service or any published rates.
The aggregator determines when payments will be deposited into your bank account. This can be anything from two days to a week or more.
ACH transactions are usually priced on a per-transaction fixed cost. The RDS Advantage church management software has provided ACH processing for repetitive payments within its system for many years, and you can continue to use it without cost.