What Is A Merchant?

A merchant is involved in wholesale trades, or in simpler terms, buying and selling things for a profit. Any retailer or shop is a merchant. From a juice shop to a fashion brand, if you sell something, you’re a merchant. 

However, you can’t truly be a merchant if you don’t have a merchant account to process customers’ payments. So while you can accept cash-only transactions, you’re losing out on a huge customer base that prefers the convenience of paying by debit or credit card.

Whether you have an eCommerce store or a brick-and-mortar location, you need a merchant account and lightning-fast POS system from Best Merchant Services to run your business and accept every customer that comes your way. 

Continue reading to learn more about what is a merchant account and how getting one can help you increase customer satisfaction for those five-star ratings your business deserves.  

What Is A Merchant

What Is A Merchant Account?

A merchant account is a separate bank account for your licensed business. You can accept credit card and debit card payments with a merchant account via swipe, tap, or smart payment methods. 

Your bank will charge your merchant account a fee each time a customer purchases something. The processing and swipe fees differ depending on your bank. 

With a merchant account and an innovative POS system, you can easily track your business spending and earnings and monitor card usage fees. 

When Do You Need A Merchant Account?

You need a merchant account if you are a licensed business that wants to attract all customers. Never turn away a transaction because you can’t accept their payment type with a merchant account and high-quality POS system and payment terminal. 

While online businesses can utilize free platforms to organize their merchant account and allow customers to pay via third-party apps, having a merchant account adds legitimacy to your e-commerce site. 

Around 80% of buyers prefer to pay with a card. 

Be it debit or credit, offering various ways to pay makes purchasing from your store easier for customers, ensuring a seamless transaction experience from start to finish.

How To Get A Merchant Account 

Getting a merchant account is simple but requires time, preparation, and costs. 

It’s worth it to research providers to find the best rates or the best customer service. Spend some time putting together all your documentation, and be patient as your application moves through the approval process. We’ll discuss the steps to getting a merchant account in detail below. 

If you have been rejected by payment processors because you were considered ‘high risk‘ or have bad credit, we can still help you get a merchant account.

Don’t settle for anything less than the best payment processing services. Contact us today and take advantage of our $500 rate guarantee, FREE payment gateway, and cash discount options.

Step 1: Research Providers

Every bank offers different rates for merchant accounts. All banks charge swipe fees, typically a small percentage of the purchase cost and a $0.10 fee per swipe.

Take time to research different providers because the costs per swipe can add up quickly when your goods are selling, like hotcakes. Research various providers’ customer service levels, as this is an excellent indicator of how quickly you’ll resolve customer card issues should they arise. 

Sometimes it’s best to open a merchant account with the banking provider you already have a business or personal account with. However, comparing your current bank with other options would be best. 

Step 2: File The Paperwork 

You’ll need to gather the necessary information to create a merchant account. Have the following information on hand: 

  • Name and business name 
  • Date of birth 
  • Address 
  • Contact information 
  • Tax ID numbers 
  • Number of operational business years 
  • Financial statements with your bank account and routing numbers 
  • Payment method for application fees, if necessary 

Once you’ve gathered all the data, you can move on to step three. 

Step 3: Apply and Wait 

Submit your documentation and pay the necessary fees to create a merchant account with your preferred provider. 

The application can take a few business days to process, so sit tight while everything is reviewed and approved. Should anything be misfiled, your application may get denied, or you may be required to submit additional documentation. 

Your application is more likely to get approved if you’re an in-person business that can verify a customer’s ID with their credit card information. You’re also more likely to get the green light if you’ve been in business for several years. 

Types of Merchant Accounts 

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There are several types of merchant accounts you can sign up for with your business. 

Traditional merchant accounts are for in-person sales, like conventional buying and selling. These accounts are perfect for small businesses that operate out of a physical location. 

However, if you want to diversify your customer base and go online, you’ll need another type of merchant account. 

E-commerce merchant accounts allow your business to accept online transactions. E-commerce merchant accounts typically have higher fees because there’s slightly more risk involved with online payments. That said, there’s another merchant account with higher prices. 

High-risk merchant accounts are for businesses that’ve been denied traditional or eCommerce merchant accounts. Typically companies get dismissed because they’ve just started their online business and don’t have the detailed financials of a more established one. 

High-risk merchant accounts tend to have higher premiums to offset the higher risks for the bank conducting business with you. 

Suppose you don’t want to pay the premiums for a high-risk merchant account. In that case, merchant aggregators can act as a third party and help you get the merchant account you prefer with a charge for their services. 

Merchant Account Fees 

All banks and merchant account providers charge fees for card transactions. Most merchants charge a percentage of the purchase price and a $0.10 fee per card swipe; depending on your bank, the percentages or flat rates differ. 

Most merchant accounts also require monthly fees and monthly purchase minimums. 

Whether you have a traditional, high-risk, or eCommerce merchant account, consult with different banking institutions to compare costs and merchant account fees. 

Alternative to Merchant Accounts 

There are some alternatives to merchant accounts that businesses can use instead of going through their bank. 

Paypal is the best alternative that allows businesses to process the various payment methods that Paypal accepts. That said, once your usage reaches a certain point, Paypal may require you to open a merchant account elsewhere. 


Now that you know the answer to the question of what is a merchant and what a merchant account is, you’re ready to conduct business with every customer. 

With a merchant account, a professional POS system, and a payment processing terminal from Best Merchant Services, your business can quickly and securely process every payment method your customers carry. 


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