A merchant account is a type of bank account that lets a business accept and process card payments, holding the funds before they are settled to the business current account.
General information, not financial, legal, or tax advice. Verify current terms and eligibility with the provider before applying.
How a merchant account works
A merchant account sits between a customer's card payment and the business current account. When a customer pays by card, the payment is authorised and processed through the card schemes and the acquiring bank, and the proceeds are held in the merchant account before being settled, usually after fees are deducted, into the business current account. The merchant account is provided by an acquiring bank or a payment service provider and works together with the tools that capture the payment, such as a card terminal at the point of sale or a payment gateway for online sales. The arrangement and fees depend on the provider, current as of 5 April 2026.
Merchant account and the payment chain
Accepting card payments involves several parties. The payment gateway or terminal captures the card details, the acquiring bank processes the transaction on the business side, the card scheme routes it, and the customer's issuing bank approves it. The merchant account is where the proceeds are held before settlement. Fees in this chain can include an interchange fee, scheme fees, and the provider's own charges, often combined into a per transaction rate. Many modern providers bundle the merchant account, gateway, and processing into a single service.
Why it matters to a business
For a business that wants to take card payments in store or online, a merchant account or an equivalent service is usually required. The cost, settlement time, and contract terms vary widely between providers, and some offer a traditional merchant account while others provide a bundled payment service that performs the same role. Because pricing models, settlement schedules, and any chargeback rules differ, a business should compare providers on total cost and settlement time, and confirm the current terms with the provider before signing up.
Frequently asked questions
What is a merchant account?
Do I need a merchant account to accept card payments?
How is a merchant account different from a business current account?
What fees come with a merchant account?
Definitions, fees, features, and eligibility change and vary by region. This page was last reviewed on 5 April 2026. Confirm current terms with the provider before applying.