What is Aggregation and How does it Work in the World of Money Transfer?

What is an aggregator? What does it mean to use aggregation? How do they play a role in the world of money transfer? Watch this short video to get an understanding of what aggregation is.


My name is Faisal Khan. I am a banking and a payment consultant. One Of the things I keep telling people is that they need to understand how aggregation works and why aggregators are important and when are aggregators important and when are they not important. So here’s a little, maybe, a background on what aggregators are and how they work.

Let’s say if you are a company based in London and you want to start integrating with a country let’s say Nigeria. Now you’ll find a bank in Nigeria, you know, you’ll have the initial non-disclosure agreement. You will then explain your business plan. They will then explain what they can do for you. Maybe they’re a right fit; maybe they’re not. Assuming they’re right fit, you will then you know start doing enhanced due diligence. You will do in-house due diligence on them; they will do enhance…Enhance due diligence on you. This process could take anywhere from two weeks to maybe a month. Once that is done, once the due diligence is complete then you talk about the commercials, the contracts these things can take anywhere from two weeks, if you…if you start assigning a standard contract, to even three months, four months, six months, depending on if you are going to be stubborn on certain clauses or not etc. And then you talk about integration, technical integration how much business you will give, you know, the business side of things. So, you to tie up two corridors between United Kingdom and Nigeria, best case scenario: 10-12 weeks. Worst case scenario. Nine to twelve months. That’s how long it takes to tie up one country.

Then if you want a backup in that country well, you know, again same…same rules apply. You need to do it again. Now you want to do India, you want to do Bangladesh, you want to do Pakistan, you want to do Nepal, you want to do Sri Lanka; same procedure. You will have…it will be taxing on you because you will not have the bandwidth to deal with multiple countries in the same time. You may, if you’re a very large company or an organization but for the rest of the small players it becomes very difficult. Then you have to go and prefund each quarter or yourself will have to put 50 thousand dollars in Nigeria, 50,000 in India, 50,000 in Pakistan, 50,000 in Bangladesh, 50,000 in Philippines. Oh you’ve already put so much money in and then you know you only have limited capital. How do you deal with it? So an easy thing is an aggregator comes in an aggregator actually goes…their business is to go through this entire you know difficult part of hooking up and making alliances with intimate partners in each territories. They will do so, they will have spent months they would have the bandwidth to deal with multiple and many many many simultaneous correspondent tie up agreements being happening at the same time. What they offer to you is one single API. So an Aggregator will come to you and say, hey here’s one API, you do one prefunding with me and you can deliver anywhere where I, as an aggregator, deliver and where you by the law, as a law are allowed to deliver.

So I would connect to an aggregator. So boom, with one connection you got you could have access to 80 countries 50 countries a hundred and nine countries and you don’t have to go through all that. So everything has been short circuited. You have one company to deal with which is the aggregator. You have one prefunding that you do with them and they can manage it very intelligently for you. Yes the downside is you will have to do a revenue share with them. That’s that’s the whole idea…that’s the whole business model of an aggregator that they do a revenue share with you. So for example in a previous deal if you were earning 100 cents and 40 cents was being maintained by your counterparty and 60 cents were coming to you. In this case 60 cents may not come to you. This case only meant to 40 cents may come to you because 20 you would have to give to the aggregator and that’s okay. Think about the time you save. Think about the access to the markets you have. Think about the unified AP…API that you have to integrate to: Just one. Think about how much less hair pulling it would entail for you to just hook into one aggregator and then connect to all. Where It doesn’t make sense to go with an aggregator is when you have one corridor that you are very good at. So let’s say you have to the USA Philippines corridor and you’re very good at it.

In this case you would not want to do an aggregation deal. You would want to go direct. If the bulk of your money is coming from a very single corridor, or go direct. Unless there’s a very specific reason why you need to go with an aggregator just to go direct. You would be better off. Chances are that the aggregator might work with you because you happen to be the dominant player in that corridor and offering the best service.

So this is what aggregators do: they go and connect into multiple markets they go do the integration, they go find backups. In some markets they have just one provider; in other markets there are multiple providers. They are able to offer many many different types of payout services: they can do cash, they can do cash over the counter, they can do debit card, credit card, mobile money loads, direct account credit etc etc. They offer you one API, very strong API and just by joining their network you also become part of their network. So, chances are if you are allowed to, you know, receive remittances, the aggregator may be giving you some business as well. So that’s the thing. There are many aggregators in the world, I don’t want to give any names to promote them. But you know you can go and do some Google searches on there and find out. Please remember to do your homework.

As always. If you have any questions or comments, there’s a contact form link in the description below. Fill it out. Talk to me and I’ll be happy to give you an explanation. Till next time, have a good one.

This page was last updated on September 1, 2022.

Share with others...