A merchant account is a type of business bank account that allows for the acceptance and processing of credit and debit card transactions. Various businesses often require a merchant account, especially online businesses. This account is specifically used to identify the seller as the owner of the purchase. Information about the owner and transactions is sent directly to the bank.

This bank account is issued by acquiring a bank for a specific provider under an agreement to process payment card transactions. Sometimes an independent sales organization, member service provider or other payment processor acts as a third party in the merchant agreement. By signing a merchant contract, the provider is contractually obliged to comply with the regulations of card associations such as MasterCard or Visa.

Merchant Account Features
There are two main categories of merchant accounts that are typically chosen by different companies depending on the nature of their business. "Swiped" refers to transactions in which a customer pays for their purchases in person by swiping or inserting a credit or debit card. This type of merchant account is mainly used in retail. "Encrypted" refers to transactions where the credit or debit card information is entered through a virtual terminal, typically over the Internet. This type of merchant account is mainly used by e-commerce merchants, however, some merchants choose to use this method for face-to-face transactions as well because it is more cost-effective.