What does merchant account mean?
An account that is issued by acquiring banks that allow businesses to accept debit and credit cards. The trader or merchant will receive the proceeds of sales into their merchant account. These sales can be both onsite and online and the purchase will have been made using a credit card or electronic commerce.
When trading both in stores as well as online it is essential that you accept as many different types of payment methods as possible. By opening a merchant account you will be able to receive global payments from anywhere in the world by simple credit card payments from the customer.
Most merchants find that the merchant account is a key aspect of their business, and this is especially true for ecommerce. Brick and mortar businesses could choose not to get a merchant account and work on a cash only basis, using a basic deposit account at any bank. Online ecommerce sites don’t have this choice, since electronic payments are their only option when accepting payments.
A merchant needs to establish a merchant account with an acquiring bank before they are able to accept electronic payments of any kind, including credit and debit cards. These merchant acquiring banks have a key role in the electronic payment process, and without them it would be impossible to efficiently process and settle electronic transactions.
When establishing a merchant account, the acquiring bank will require a detailed merchant account agreement that will spell out each detail of the relationship between the bank and the merchant, including all the fees and transaction costs that will be charged by the bank. There may also be base fees for certain services that are payable monthly or annually.