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What is a Merchant Account?

A merchant account is a relationship with a credit card processing bank, that allows a merchant to accept and process credit cards. The merchant account will allow the merchant to swipe their customer's credit or debit cards through a credit card terminal, or will allow the merchant to manually key in transactions. Merchant accounts can be set up in the name of an individual or by a corporation. Each location of a business with a single ownership must have its own merchant account. And, each website set up by a merchant that either has a different name or sells different products needs to have its own merchant account.

When setting up a merchant account, the merchant will specify what method they plan to use for obtaining information from their customers credit or debit cards. This determined method will also determine the cost that the merchant must pay to process their customers credit cards. The lowest cost for processing would be swiping customer's cards through a credit card terminal. Keying in transactions or processing over the internet has a higher cost than swiping through a credit card terminal due to the higher risk associated with this method.