ACH aggregation offers the ability to act as a master merchant. You are able to enroll sub merchants or platform users on the fly. The benefits include frictionless enrollment and more control of the sub merchant user experience.
Why would you want to leverage ACH Aggregation?
We will illustrate using Yoga77, a fictional SAAS application that manages Yoga studios. Yoga77 has a billing component for monthly membership fees and has integrated an ACH payment solution.
Yoga77 wants to enroll and set up sub merchants to process payments very quickly. They have partnered with a payment gateway and processor that allows ACH aggregation. Typically every Yoga77 user would have to be vetted and apply for an ACH account. This process includes KYC and an underwriting component and typically takes from 2-4 days. Yoga77 does not want to make their user wait nor go through the application process. They collect enough information to then programmatically pass to their payments partner. Credential are issued and the Yoga77 end user is ready to process immediately. This is ACH aggregation.
Credit Card Aggregation has been around for years [read for a more in depth examination of risk and technical aspects]. ACH aggregation will become much more common but currently very few payment providers offer an ACH option. This is primarily due to the payment gateway partners back end bank[s]. These individual banks tend to be much less inclined to the risk exposure [financial and reputational].
There is an alternative to becoming an aggregator while still being able to offer fast account set up. You may find a partner with API’s for merchant account on boarding that offers a hybrid blend between traditional ACH accounts and an aggregation model. Advantages are no risk, no support and much lower implementation costs. You still gain revenue benefits without admin burdens. It is unlikely you would be able to provision accounts as quickly as if acting as the aggregator, but a middle ground may be the best fit for you.