A merchant account is an account that allows a business to accept electronic payments, especially card payments. It holds funds from customer transactions before they are settled to the merchant's regular business bank account.
Merchant accounts are usually provided through an acquiring bank, payment service provider, payment facilitator, or another payment provider, depending on the merchant’s setup.
After a payment is authorised, cleared, and settled, the funds are credited to the merchant account or payment provider setup and then paid out to the merchant’s business bank account according to the settlement schedule. Typically, a merchant account is opened in partnership with an acquiring bank, which directly processes electronic transactions. A merchant account is one of the core components businesses need to accept card payments and build reliable payment operations.
Merchant accounts can differ depending on how the business accepts payments, what industry it operates in, and how the acquiring relationship is structured.
Although partnering with an acquiring bank is a reliable way to open a merchant account, the registration process involves many hassles that not all businesses are willing to endure. It's difficult to predict whether your online merchant account application will be approved and how long the acquirer will consider the request. Banks usually prefer not to work with high-risk businesses or startups to avoid potential issues or chargebacks. Therefore, opening a high-risk merchant account can be more problematic. Plus, acquirers charge various fees for payment processing services, such as setup, monthly, and transaction fees. Therefore, before cooperating with an acquiring bank, we recommend that you evaluate all fees and ensure they are bearable.
Opening a merchant account usually involves business verification, risk assessment, and agreement with the provider's terms. The provider may review the company's industry, ownership, website, transaction volume, chargeback history, geographic footprint, and compliance profile.
A merchant account is not the same as a regular business bank account.
A business bank account is used to store and manage company funds, pay expenses, receive transfers, and run day-to-day financial operations.
A merchant account is used to receive funds from card or electronic payment transactions before they are settled into the business bank account. It is part of the payment processing flow and is connected to acquirers, PSPs, card networks, and payment gateways.
In simple terms, a merchant account helps a business accept payments, while a business bank account helps the business manage its money after settlement.
There are many merchant account providers on the market, but not all of them are reliable and have favourable terms of cooperation. But, considering several factors when choosing a merchant account processing solution, you are most likely to find the best merchant account for an e-commerce business:
Payment security should be the priority for every merchant who wants to have a good reputation with their customers. Therefore, when choosing a merchant account provider, pay attention to the security measures they have to protect your customers' payment information. The main ones are:
Without these security measures, your customers' card data can be stolen and used by fraudsters.
Obviously, opening and maintaining a merchant account will come with costs. To avoid being caught off guard, check out all the merchant account fees that certain PSPs charge for their services. These can be monthly fees, per-transaction fees, setup fees, and others.
Sudden problems with transaction processing on your e-commerce site can damage your reputation. Even if it happens to you, it's essential to eliminate all glitches as soon as possible. Luckily, many merchant account providers offer prompt customer support and are ready to help their clients with any issue.
The right provider should support the business's payment methods, currencies, regions, risk profile, reporting needs, settlement expectations, and technical setup.
For growing businesses, a merchant account is only one part of the payment setup. Merchants may also need payment provider connections, payment methods, routing rules, fraud controls, reporting, reconciliation, and settlement visibility.
Corefy helps businesses manage these payment operations through a single infrastructure layer, connecting merchants to multiple PSPs, acquirers, and payment methods while making transaction flows easier to monitor and control.
