Related Questions
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For payment service providers (PSPs, entities that enable merchants to accept electronic payments), acquirers, and compliance teams, hidden aggregator operations create a critical challenge: how do you distinguish merchants selling directly from those operating payment facilitation infrastructure when both present identical documentation during onboarding?
This is not primarily a fraud problem. It is a structural underwriting problem. Unlike traditional merchant categories where you verify business legitimacy and payment risk, potential aggregators require you to function as an infrastructure analyst, mapping payment flows and technical capabilities to identify whether the merchant crosses from direct operations to facilitating transactions for unvetted third parties.
The stakes: Card network rules require payment facilitators to register and hold processors accountable for unregistered facilitation operations. Missing these patterns exposes your institution to network fines, banking relationship termination, and regulatory action from the Financial Crimes Enforcement Network (FinCEN) and state money transmitter authorities.
Visa and Mastercard require payment facilitators to register, implement sub-merchant underwriting programs, and report sub-merchant data. Operating as a de facto facilitator without registration triggers network fines that scale with transaction volume.
Your underwriting must identify facilitation patterns before merchants enter your portfolio to avoid regulatory exposure.
A single merchant relationship can expose you to numerous unvetted businesses when aggregator infrastructure operates behind clean business documentation. One compliance failure, fraud pattern, or regulatory violation by any hidden sub-merchant creates liability for your organization.
Traditional risk modeling assumes discrete business evaluation, not networks of unknown sellers.
Platforms split payments to multiple beneficiaries through backend configurations invisible during standard document review. Seller tools exist behind authentication walls. Sub-merchant onboarding happens on separate domains not disclosed during underwriting.
Legal structure gaming uses terms like "partners" or "collaborators" rather than "sellers" to avoid explicit aggregator language while enabling all the functionality.
Essential verification breaks down into four core investigation areas:
Payment flows reveal what business documentation conceals. We consider this the single most reliable indicator of hidden aggregation.
The framework shows how to identify systematic split payments, map multiple beneficiary accounts, recognize revenue share settlement logic, and analyze payment processor relationships. In our assessment, automated payment splitting to third parties indicates multi-party operations inconsistent with direct merchant models.
High-risk patterns include settlements flowing to different entities, payout logic based on seller identifiers, and the use of marketplace payment infrastructure like Stripe Connect or Adyen for Platforms.
The systems a platform builds reveal its true business model. Direct merchants need customer onboarding. Aggregators need seller onboarding.
Critical red flags include self-service seller registration, multi-entity information collection, tiered account structures with seller-specific roles, and integration with Know Your Business (KYB) providers for ongoing verification.
The framework provides testing protocols to identify hidden registration flows, methods to analyze user role structures, and documentation that proves single-entity versus multi-party operations.
Terms of service drafters carefully avoid explicitly stating "we facilitate payments for sub-merchants". But legal documents must still describe what the platform actually does.
We look for seller provisions, commission structures, third-party liability disclaimers, seller performance policies, indemnification clauses protecting platforms from seller actions, and payment processing language that reveals facilitation operations.
References to "our sellers", commission or revenue share provisions, and three-party transaction structures are disqualifying red flags.
Platforms do not accidentally build sophisticated seller dashboards, inventory management systems, or order routing tools. These capabilities exist for specific purposes.
Critical capabilities that indicate aggregator operations include seller dashboards showing individual performance metrics, inventory management allowing different parties to control different products, order fulfillment routing to multiple entities, seller communication tools, payout and financial management per seller, and storefront customization options.
When customers need to contact specific sellers rather than the platform, those sellers are the actual merchants.
Organizations that implement this framework can gain:
Regulatory compliance
Clear evidence that your underwriting validates card network registration requirements and FinCEN Customer Due Diligence obligations, reducing regulatory examination risk.
Risk portfolio integrity
Proper identification of facilitation operations before onboarding, preventing exposure to unvetted sub-merchant networks that undermine portfolio risk modeling.
Operational consistency
A systematic assessment protocol and documentation requirements that your team can apply uniformly, eliminating subjective evaluation and repeated underwriting failures.
Network relationship protection
Demonstrated due diligence that prevents card network fines, banking relationship termination, and enforcement actions when platforms are discovered post-onboarding.
Defensible decisions
Investigation methodology and documentation standards that demonstrate due diligence to card networks, regulators, auditors, and internal stakeholders when questions arise.
Ballerine's merchant underwriting platform automates aggregator detection through payout flow analysis, technical infrastructure mapping, and continuous monitoring. Risk teams use Ballerine to identify payment facilitation patterns during onboarding and maintain ongoing visibility into merchant operations. The platform integrates the four-pillar assessment framework into automated workflows, reducing manual investigation time while improving detection accuracy.
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