DEFINITION of 'Merchant Account'

A type of business bank account that allows a business to accept and process debit and credit card transactions. Merchant accounts are necessary accounts for many businesses, and are essential for online businesses. There are different types of merchant accounts to choose from for businesses. For instance, some merchant accounts are designed specifically to handle online sales.

BREAKING DOWN 'Merchant Account'

A merchant account is an agreement made between the business/seller, the bank where the merchant account is held and the payment processor to settle all transactions made by debit and credit cards. The fees associated with these accounts are usually in the following categories: monthly, discount rate and transaction. The rate that a business is charged for debit and credit card services provided by its merchant account is called a merchant discount rate.

RELATED TERMS
  1. Merchant Agreement

    A contract between a business and a credit card service provider.
  2. Batch Credit Card Processing

    The process of a merchant processing all of its authorized credit ...
  3. Processing Date

    The month, day and year when a merchant’s bank processes a credit ...
  4. Night Depository

    A bank drop box where merchants can deposit their daily cash, ...
  5. Merchant Bank

    A bank that deals mostly in (but is not limited to) international ...
  6. Authorized Transaction

    A credit card purchase for which the merchant has received approval ...
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