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ReadersSpeak
The cons of merchant aggregation We published a lead article, "Switch it up this year: investigate
aggregation," The Green Sheet, Jan. 13, 2014, that focused on
Can you tell me if there is an archive article of any sort the positive aspects of aggregation. A feature on the downside of
related to the "argument against merchant aggregation." this practice would likely be valuable to our readers.
Anything along those lines would be fine.
Thanks again for your question. Let me know if I can be of
Steve Rizzuto further help.
President, Commercial Services Editor
TransFirst LLC
The status of virtual currencies
Steve,
Are virtual currencies real currencies? And does bitcoin
That's an excellent question, especially since the perception have staying power?
of what aggregation is has changed over the years from the Dave Smythe
forbidden practice of one merchant using his or her merchant Smythe Payment Affiliates
identification number to process payments for multiple
merchants, to that of payment businesses processing numerous
small merchants under one umbrella. Dave,
Also, Visa is implementing changes to its Fixed Acquirer Most of our sources distinguish between government-backed
Network Fee (FANF) that are expected to raise costs for currencies like the U.S. dollar, and virtual currencies such as
aggregators because Visa will be assessing FANFs based on bitcoin. But virtual currencies are nevertheless real and on the
individual merchant transaction types and volumes rather than government's radar. In August 2013, Judge Amos Maazant of
as one fixed fee per aggregated merchant group. This topic is the U.S. District Court, Eastern District of Texas, ruled that
touched upon in a news article we posted April 24, 2014, under while bitcoin is not akin to the U.S. dollar, it is comparable to
Breaking Industry News on our home page, www.greensheet. precious metals, such as gold, or other valued resources. The
com. And Ken Musante, President of Eureka Payments LLC, defendant in that case had argued that bitcoin is not money and
is writing an article on Visa's FANF changes that will be slated is thus neither regulated by the United States nor subject to
for an upcoming issue. lawsuits based on laws pertaining to currencies.
As for archived articles that delve into the cons of aggregation, In March 2014, the IRS ruled that bitcoin and other virtual
here are several that should be helpful: currencies do not have legal tender status, but are instead a
form of property governed by capital gains tax regulations.
• "Is the aggregator model right for you?" by Chandan Also, wages paid in bitcoin are subject to income tax at the
Mukherjee, The Green Sheet, July 9, 2012, issue value of the bitcoin at the time of payment. Such payments are
12:07:01: This discusses the pros and cons of several also subject to employer tax withholding requirements. The
aspects of the aggregation model: risk assessment, IRS views bitcoin payments for goods and services much like it
transaction switching, funds settlement, and reporting views barter transactions.
and business intelligence.
Whether bitcoin is here to stay is difficult to predict. Given
• "Micropayments are no small matter," by Patti Murphy, the lack of success of prior alternative currencies due in part
The Green Sheet, March 26, 2012, issue 12:03:12: to unfavorable monetary policy, at least in the United States,
This article doesn't argue against aggregation, but it banking on bitcoin is not for those who are risk averse. Good
mentions a way to process micropayments for digital luck to you if you decide to invest in bitcoin.
content providers that doesn't necessitate aggregation. Editor
• "Square versus the payments world," by Tim McWeeney,
The Green Sheet, Oct. 24, 2011, issue 11:10:02: This What's your perspective?
article calls into question whether Square's business
model, based on merchant aggregation, is sustainable. Do you have thoughts on the impact of merchant
aggregation on our industry and whether it's a good idea
• "What is an aggregator anyway?" by Adam Atlas, to adopt it as a business model? What about other concerns
The Green Sheet, Nov. 28, 2005, issue 05:11:02 of promising developments of interest to payment pros?
While some of the content in this article is out of date Please let us know at greensheet@greensheet.com.
because the card brands' structure and rules have
changed, some of the drawbacks to aggregation remain
applicable.
8
The cons of merchant aggregation We published a lead article, "Switch it up this year: investigate
aggregation," The Green Sheet, Jan. 13, 2014, that focused on
Can you tell me if there is an archive article of any sort the positive aspects of aggregation. A feature on the downside of
related to the "argument against merchant aggregation." this practice would likely be valuable to our readers.
Anything along those lines would be fine.
Thanks again for your question. Let me know if I can be of
Steve Rizzuto further help.
President, Commercial Services Editor
TransFirst LLC
The status of virtual currencies
Steve,
Are virtual currencies real currencies? And does bitcoin
That's an excellent question, especially since the perception have staying power?
of what aggregation is has changed over the years from the Dave Smythe
forbidden practice of one merchant using his or her merchant Smythe Payment Affiliates
identification number to process payments for multiple
merchants, to that of payment businesses processing numerous
small merchants under one umbrella. Dave,
Also, Visa is implementing changes to its Fixed Acquirer Most of our sources distinguish between government-backed
Network Fee (FANF) that are expected to raise costs for currencies like the U.S. dollar, and virtual currencies such as
aggregators because Visa will be assessing FANFs based on bitcoin. But virtual currencies are nevertheless real and on the
individual merchant transaction types and volumes rather than government's radar. In August 2013, Judge Amos Maazant of
as one fixed fee per aggregated merchant group. This topic is the U.S. District Court, Eastern District of Texas, ruled that
touched upon in a news article we posted April 24, 2014, under while bitcoin is not akin to the U.S. dollar, it is comparable to
Breaking Industry News on our home page, www.greensheet. precious metals, such as gold, or other valued resources. The
com. And Ken Musante, President of Eureka Payments LLC, defendant in that case had argued that bitcoin is not money and
is writing an article on Visa's FANF changes that will be slated is thus neither regulated by the United States nor subject to
for an upcoming issue. lawsuits based on laws pertaining to currencies.
As for archived articles that delve into the cons of aggregation, In March 2014, the IRS ruled that bitcoin and other virtual
here are several that should be helpful: currencies do not have legal tender status, but are instead a
form of property governed by capital gains tax regulations.
• "Is the aggregator model right for you?" by Chandan Also, wages paid in bitcoin are subject to income tax at the
Mukherjee, The Green Sheet, July 9, 2012, issue value of the bitcoin at the time of payment. Such payments are
12:07:01: This discusses the pros and cons of several also subject to employer tax withholding requirements. The
aspects of the aggregation model: risk assessment, IRS views bitcoin payments for goods and services much like it
transaction switching, funds settlement, and reporting views barter transactions.
and business intelligence.
Whether bitcoin is here to stay is difficult to predict. Given
• "Micropayments are no small matter," by Patti Murphy, the lack of success of prior alternative currencies due in part
The Green Sheet, March 26, 2012, issue 12:03:12: to unfavorable monetary policy, at least in the United States,
This article doesn't argue against aggregation, but it banking on bitcoin is not for those who are risk averse. Good
mentions a way to process micropayments for digital luck to you if you decide to invest in bitcoin.
content providers that doesn't necessitate aggregation. Editor
• "Square versus the payments world," by Tim McWeeney,
The Green Sheet, Oct. 24, 2011, issue 11:10:02: This What's your perspective?
article calls into question whether Square's business
model, based on merchant aggregation, is sustainable. Do you have thoughts on the impact of merchant
aggregation on our industry and whether it's a good idea
• "What is an aggregator anyway?" by Adam Atlas, to adopt it as a business model? What about other concerns
The Green Sheet, Nov. 28, 2005, issue 05:11:02 of promising developments of interest to payment pros?
While some of the content in this article is out of date Please let us know at greensheet@greensheet.com.
because the card brands' structure and rules have
changed, some of the drawbacks to aggregation remain
applicable.
8
