Many business owners, especially owners of SMEs, are starting to realise the ample benefits to offering credit and debit card processing facilities to their customers. The ability to make card payments makes life easier for people, and most will only do business with a company that  makes its customers’ convenience a priority.

Card payment facilities also allows customers the option to pay for purchases even if they do not have cash on hand. If, on the other hand, you have a cash-only policy, you will definitely have a lost sale every now and then. Customers also appreciate card processing systems because it helps them gain points on reward cards and manage cash flow by floating balances.

The Merchant Account

You will need a merchant account in order to accept card payments for your business. This is a special account you open with a bank that will process the transfer of funds from your customers’ card service provider to your own business bank account.

As the merchant, you are fully responsible for the transactions that occur with this account. Each bank that offers merchant accounts has its own terms of service, setup process and fees and it’s imperative that you look into these before signing up for an account.

One of the first things you’ll need to consider is whether you will have a dedicated merchant account or an aggregated one. A dedicated merchant account is one that will be created exclusively for your business, while an aggregated one is used by several businesses.

Each type of account carries its own pros and cons, which you should evaluate before making your choice.

Dedicated Merchant Accounts


To start off, dedicated merchant accounts offer you significant control over your funds and your company’s reputation. After every transaction, the merchant account provider will deduct the processing fees and the rest of the amount will be deposited directly into your business bank account.

The provider has control over some activities, such as:

  • debiting your account if customers make chargeback claims
  • correcting errors
  • taking action if there is evidence of fraudulent activity

All these actions, however, are done only in accordance with defined industry regulations. The provider cannot impose its own rules as to how they will deal with situations such as fraudulent activities and chargeback claims.

Another significant benefit of having a dedicated merchant account is that keeping your account in good standing is your sole responsibility and will not be affected by any fraudulent or any other unethical activities from other businesses.


The main drawback of using a dedicated merchant account is the application process. Expect to wait at least 48 hours before your application is approved. After this, you’ll still have to wait a bit longer to set your account up.

A dedicated merchant account provider will also do a rigorous check to make sure that you have a strong credit history. If you’re a new, small business owner, your credit worthiness might not stack up against this sort of checks.

Aggregated Merchant Accounts


One of the main attractions of opting for an aggregated merchant account is that the application process is quick and straightforward. If you sign up for a Paypal account, for instance, you could most likely start processing card payments within an hour.

An aggregated merchant account also makes sense if you’re running a new business and have nothing to show in line of a solid credit history. This is also true if your credit score is low, or if you are in an industry where underwriting is difficult. Of course, you will need to provide information about your company, but the credit terms are not that sturdy.


Aggregated merchant account providers have full control over the way funds are transferred into their clients’ bank accounts. If your provider decides to change its policies on how to handle or disburse your funds, there is nothing much that you can do.

With a dedicated merchant account, funds are transferred straight away into your account, but with an aggregated one, the provider receives the funds first and then deposits them into your account at its own discretion. It is important in this regard to go through the contract terms carefully to avoid any nasty surprises.

Another significant drawback of aggregated merchant accounts is that your business reputation and even your credit line can be affected by unethical activities from other businesses that use the same merchant account. If enough fraudulent activity from other companies occurs, the provider’s card processing ability could get shut down.

If you do got for an aggregated merchant account, it might be best to stick to a large merchant account provider which will have the ability to absorb any damage caused by fraud. If you prefer to use a smaller provider, make sure to defend yourself against fraud, by investigating the other businesses that use the provider and checking that they do not engage in unethical transactions.

Final Thoughts: Why Price Shouldn’t Be the Defining Factor

As you have seen, there are advantages and disadvantages in choosing either a dedicated merchant account or an aggregated one. Try and see which one will be most beneficial for your business, in terms of speed, security and cost.

It is vital to remember that price shouldn’t be your sole defining factor when choosing the type of merchant account to go for. Don’t settle for one because it has a lower rate, and instead choose an account that will help you achieve your business goals.


Author - Nigel Vaughan

Nigel has over 10 years experience in digital marketing, and loves tech and all kinds of electronics. A keen cyclist and cycle-tourist, he has cycled through 25 countries worldwide.