A Sub-Merchant is a business that uses a payment facilitator or payment aggregator to process their transactions. Instead of having a direct relationship with the acquiring bank, the sub-merchant processes transactions through the master merchant’s account.

This simplifies the process of setting up payment acceptance for the sub-merchant. It allows smaller businesses, which may not have the volume of transactions necessary to establish their own merchant account or may find the application process too cumbersome, to accept card payments.

The payment facilitator or aggregator takes on the responsibility of managing the merchant account, handling compliance and security requirements, and settling transactions with the acquiring bank.

The sub-merchant typically pays a fee to the payment facilitator or aggregator for this service, which may be higher than the fees associated with a direct merchant account. The convenience and simplicity of the arrangement often make it a preferred option for small and medium-sized businesses.