Acquiring experts also admonish merchant aggregators to understand all regulations that could affect them. In January, Square Inc. got hit with a cease-and-desist order from the state of Illinois for being an unlicensed money transmitter. Illinois also issued similar orders to seven other payments companies, including prepaid card program manager NetSpend Holdings Inc. Both Square and NetSpend said in March that they were still processing transactions from Illinois customers and indicated they were working with authorities to resolve their issues.

“What happened to Square is an example of why aggregators need to know regulatory compliance in all 50 states,” says Todd Ablowitz, president of Double Diamond Consulting LLC.

Digital Transactions, April 1, 2013
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