2. PG / Aggregator’s Charges

When various entities move the funds from point A to Point B, they charge certain fees. As merchant you would deal with an aggregator.

Main purpose of any business… to earn revenue and that’s exactly what aggregator do when they enable payments for a merchant.

So your aggregator will give you rate card or PG charges and that will be,

• Percentage (%) of successful transaction value (E.g. 1.50% of value)
• Flat fee per successful transaction (Rs.10 per transaction)
• Mixed pricing i.e. combination of % of value + Fixed Fee (E.g. 2% + Rs.1)

Factors that influence aggregator’s charges:

• Type of merchant (whether e-commerce, Utility or insurance)
• B2B or B2C business model
• How big the merchant is (remember, payments is a volume game)
• What is aggregator’s back-to-back commercial arrangement with banks

In a nutshell, a utility merchant will have lower commercials than and e-commerce merchant and a big e-commerce merchant may enjoy lower commercials than a small e-commerce merchant.

Typical commercial structure for different merchant types:

Things to note:

• Credit Card rate for E-Commerce sector is higher than for utility/Govt.
• Exception for flat fee for Net-Banking is CITI bank
• MF, Brokerage, NBFC can get flat on debit cards (conditional)
• Credit cards are not allowed MF, Brokerage (SEBI Guideline) and NBFC (can’t pay one credit with another credit)
• Wallets are not allowed for MF, Brokerage, NBFC as source of wallet can be credit card
• B2B companies enjoy flat fee on UPI and net-banking (Except CITI and sometimes HDFC)

Based on back-to-back cost arrangement and subventions, aggregator can provide better rates to large merchants.

<<We will visit that model in different topic in this series>>