What types of merchant account are there?

What is a direct merchant account?  Merchant accounts are a necessity for any business hoping to trade online, allowing them to process card payments and offer consumers an efficient ordering process. There are basically 2 types of ‘card not present’ merchant accounts – a dedicated or direct merchant account and an aggregate merchant account. A direct merchant account is an account set up for one business where the merchant has a direct contract with the acquiring bank. Rates are based on volumes and industry type of your business. An aggregate merchant account is where businesses’ funds are all put together in the same metaphorical pot.  A single merchant account provides credit card processing for an entire portfolio of merchants. Although having an aggregated account can be a lot simpler than opening up a direct merchant account, there are drawbacks. Owners of the account have less control over their funds, it takes longer to access said money and it’s generally more expensive. With a direct merchant account, the rate offered is based on the volume of transactions your business typically handles and the kind of products you sell – it’s basically a decision made after certain risks are weighed up. To obtain one of these accounts, a lengthy due diligence and underwriting process will be undertaken.  But a direct merchant account allows you to have full control of keeping the account in good standing.  You can manage fraud and chargebacks. And you will typically have access to funds within 3 days of settlement. Why have a merchant account at all? If you don’t have an online merchant account, your online business cannot accept debit or credit card payments from your consumers — vastly decreasing your potential consumer base/reach. There are over 500 million people with MasterCard debit cards alone in the world, with a further 1.2 billion in possession of a Visa debit card. By shutting your business off to these significant audiences, you’re surely doing yourself more harm than good. You must have a merchant account to reach these cardholders.


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