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Heat cut:
The edges of the patch are stitched using the embroidery machine and then cut with hot knife to seal and protect the edge from fraying. It creates a thinner and flatter border. This is recommended for patches with complicated shapes.
Merrowed:
The edges of the patch are wrapped with raised stitching using an overlocking machine. It creates a thick and rounded border that is best for plain, symmetrically shaped patches.
Laser cut:
The edges are cut using a laser machine. There are no stitches around the edge of the patch, only the twill. This will likely fray after a long time.