What is a Merchant Account?

Answer:
Every business must have a merchant account

in order to accept credit cards. An acquiring bank extends a line of credit (this is not considered a bank account) to a merchant who wants to accept credit card payments of a certain card association brand such as Visa or MasterCard.

The bank or financial institution that accepts payments for the products or services on behalf of a merchant is the acquiring bank. The acquiring bank accepts or acquires credit card transactions performed which have been issued by a bank other than itself.

On behalf of the merchant, the acquiring bank exchanges funds with issuing banks. The net balance of the merchants’ daily payment card activity is then paid to the merchant. Of course, this total is the amount after the acquiring bank deducts reversals, fixed rate interchange fees, and acquirer fees. Acquirer fees can change at the discretion of the acquirer.