Payments glossary · Core
Merchant Account
A merchant account is an agreement with an acquirer that lets a business accept card payments. Card sales are processed under it and then paid out, net of fees, to the business's ordinary bank account.
How Merchant Account works
Despite the name, a merchant account is usually not a bank account the business can use freely. It is the acquirer's record of the merchant's processing, with a merchant ID, agreed pricing, limits, a settlement schedule and risk terms such as reserves. Opening one involves underwriting: the acquirer checks the business, its owners, what it sells, expected volumes and processing history before approving.
There are two main routes. A dedicated merchant account is contracted directly with an acquirer, or through an ISO, with the merchant as the acquirer's direct customer. An aggregated account, provided by a payment facilitator, lets many small businesses process as sponsored merchants under the facilitator's own acquiring relationship. Aggregated accounts are faster to open and simpler; a dedicated account can offer more negotiable pricing, more stable terms for larger businesses and a direct relationship with the acquirer. Visa's rules require the acquirer to sign a direct agreement with sponsored merchants above USD 1 million in annual volume, with some exceptions.
Businesses operating in several countries or currencies may need more than one merchant account, for example one per region for local acquiring, or separate accounts for different brands or websites. When applying, prepare company documents, ownership details, website terms and refund policy, and recent processing statements if you have them.