'What Is A Merchant Account?' — 2Checkout E-Commerce Glossary

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What is a Merchant Account?
A bank account necessary for e-commerce companies that allows a business to accept credit and debit cards.

How Does a Merchant Account Work?
A merchant account consists of a relationship between an acquiring bank, a merchant, and a payment gateway. Through this relationship, a business can legally accept credit and debit card payments online from a cardholder purchasing a good or service from said business. Payment processors, independent sales organizations, and member service providers can also be part of a Merchant Account contract. Merchant Accounts are required to abide by the regulations set by card associations, such as Visa or MasterCard: each merchant account applies to one set of credit/debit cards.

Merchant accounts are subject to varying fees. These fees can either be implemented through recurring billing or as a percentage of each transaction, or sometimes both.