Is an Aggregated or Dedicated Merchant Account Right For You?

Offering your customers the option to pay with a credit card is a great way to enhance revenue for your small business. Your customers want the points associated with rewards cards, and they want to manage their own cash flow by floating balances or financing their purchases. Allowing them to use credit cards accomplishes both.

So, give the customers what they want. If you don’t accept credit cards yet, now is a great time to start. Having made that decision, the next step is to obtain a merchant account for credit card processing. Merchant accounts come in two basic flavors, dedicated accounts that are provisioned specifically for your business, and aggregated accounts (such as those provided by PayPal) that use a single merchant account to provide credit card processing for an entire portfolio of companies.

Each has its advantages and disadvantages. Consider these 4 key points when deciding which type is the most advantageous for your small business:

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Funds Control

With a dedicated merchant account, transaction proceeds, less processing fees, are deposited directly into your business bank account. While the merchant account provider can correct errors, react to potential fraud, and debit your account for customer “chargeback” claims, this must all be done based on industry-standard credit card processing rules. With an aggregated merchant account, transaction proceeds go to the service provider and are then deposited to your bank account at the provider’s discretion. There are no industry standards or rules that govern how an aggregated merchant account provider handles or disburses your money. The provider makes the rules, and can change them at will, so if you choose an aggregated merchant account pay very close attention to the contract terms and any changes made to them.


To obtain a dedicated credit card processing merchant account your business will need to go through comprehensive underwriting. If your business is very new, if it has a less than stellar credit history, or if you’re in a difficult to underwrite industry, then an aggregated merchant account may be the best choice. While you’ll still need to provide information about your business, underwriting for aggregated accounts is typically far less rigorous than for dedicated merchant accounts.


Getting a dedicated merchant account can take time. While there are some providers automating the process and providing same-day decisions, a typical application will take 48 hours to approve and additional time to integrate into a POS or electronic payment processing environment. Signing up for credit card processing under an aggregated account service provider can usually be done in minutes, and it often comes with an online system that can have you actively processing payments within the hour.


With a dedicated merchant account the only company processing credit card transactions through it will be yours. Thus, you are in full control of keeping the account in good standing. With an aggregated account, you’ll have no idea about the other companies processing transactions. If a good number of them engage in fraudulent activity, it is possible that the service provider’s processing account will be terminated and even honorable businesses like yours will lose credit card processing ability. If you do go with an aggregated account, it is very important to make sure that your provider is large enough to absorb fraud generated by a few bad apples. If you’re using a small provider, try to get a list of the other businesses using the service, and check them out to see if you want to live in the same neighborhood.

Of course, the actual credit card processing rates you’ll be charged are a critically important factor as well. But as with most things, you get what you pay for; so don’t choose a low rate without also considering how the provider you select will impact your overall business. Do you have any experience with credit card processing? Feel free to comment or continue the conversation below or online at Twitter and Facebook.

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