The Definition of a Merchant Account

Written by: Charge.com Payment Solutions, Inc.

Learn what a merchant account is, and how it will help your business grow.

Merchant services are a special kind of banking that is designed to help store owners move money around to pay for goods and services. Merchant services allow customers to use their credit or debit card to make transactions in-store or online. They are the mechanism by which a business is able to use a customer’s credit card number to transfer funds, but they also handle all transactional data.

In this brief guide, you’ll learn everything you need to know about the common merchant account. We’ll cover what these accounts do, how to get one, and offer some advice to evaluate your options.

What a Merchant Account Does

Credit card processing companies offer similar services to a merchant account, but they are not the same. A merchant account is an agreement you make with a bank, as a business owner, which dictates how transactions will be settled.

Payment processors, on the other hand, facilitate the transfer of money for you. They own the infrastructure and you simply use the service. They aren’t as accommodating as a merchant might be, but they tend to have very simplistic fee structures.

Why choose a merchant account? The answer has to do with accepting payments online, and trying to remain flexible with clients. What if someone buys goods from you with stolen money, or wants a refund on something they bought that doesn’t work for them? A payment processor might take weeks to handle such a dispute, and the problem can very quickly spiral out of control to the point where your account could be suspended.

Merchant accounts grant business owners the freedom they need to process transactions on their end, setting their own policies for returns, exchanges and disputes.