Merchant Account
A bank account that allows businesses to accept card payments.
A merchant account is a specialized bank account that processes credit and debit card transactions. When a customer swipes or enters their card, the payment processor routes funds through the card network to the merchant account, minus processing fees (typically 1.5–3.5%). Modern alternatives like Stripe and Square act as payment facilitators that bundle merchant account functionality.
Example
A boutique sets up a merchant account through its bank to accept Visa and Mastercard, paying 2.6% + $0.10 per transaction in processing fees.
Why It Matters for Your Business
Accepting card payments is essential for most businesses since cash-only operations lose significant revenue, but understanding processing fees protects your margins.
More Banking Terms
ACH
Automated Clearing House - an electronic network for financial transactions.
APR
Annual Percentage Rate - the yearly cost of borrowing including fees.
APY
Annual Percentage Yield - the real rate of return on savings including compound interest.
Bank Reconciliation
Matching bank statements with internal records to identify discrepancies.
Business Checking
A bank account designed for business transactions.
Related Financial Guides & Resources
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