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A Beginner's Guide to Merchant Account Processing in 2021

If you run a small to medium-sized business, you make up more than 90% of the US business population. That also means you're essential for creating economic growth (go you!)

As you scale your business up, you need to handle a wider variety of payments from your customers — without the right tools, you could miss out on countless sales.

That's why you need a merchant account. And in this quick guide, you'll learn everything you need to know about them. We'll cover:

  • What merchant account processing is
  • What merchant accounts are used for
  • Which merchant account provider you should choose
  • What the costs of merchant accounts are
  • What you need to set up a merchant account

Ready to start? Let's go!

What is merchant account processing?

A merchant account is a business bank account that lets your company accept credit card payments (and debit cards with PINs). A processor (also called a payment gateway or merchant service provider) allows merchants to accept credit cards. They do this by converting the merchant's information into something that credit card companies understand.

Processors will charge you processing fees for each transaction — your merchant account provider might charge as well. Each merchant account provider sets its own prices, so it's essential to shop around for merchant services to get the best deal.

What are merchant accounts used for?

Merchant accounts are typically used by businesses that sell their own products or services. Still, you can use merchant accounts to collect donations, receive payment for your work (through freelance websites), accept credit card payments from subscribers, or even sell items on auction sites like eBay.

With a merchant account, your company becomes an official merchant of record — meaning that it's now a legal business and can process credit card payments. Once processing is in place, you don't have to worry about anything else — merchant service providers will take care of everything for you!

Which merchant account provider should you choose?

When choosing a provider, it's important to remember they aren't all created equal.

Like Square and PayPal, some provide merchant accounts as part of their suite of services (such as processing and payment gateways). Other providers only offer accounts to clients who want to sell physical products online.

There are merchant account providers that specialize in specific industries and ones that process for any business type. Some only accept US merchants, while others will accept international sellers. Not all merchant service providers offer merchant accounts with secure shopping cart software or PCI compliant security solutions — but that doesn't mean they aren't out there!

Here are some standard picks:


Helcim is a popular merchant account processor for its low processing fees and great support. In addition, Helcim merchant account services provide fast turnaround times for merchant account applications and merchant refunds. They also let you turn your existing hardware — phones, tablets, computers — into terminals!


If you're looking for a merchant service provider that accepts international merchants, offers shopping cart software, and provides PCI compliant security solutions, PAY.ON merchant account services are hard to beat.

PAY.ON merchant account services are also great for mobile merchants, non-profits, eCommerce stores, and more!

QuickBooks Payments

If you already use QuickBooks accounting software to process your merchant accounts, then signing up with their merchant account service product is a smart move.


For flat-rate services, Square is a popular option. Square merchant accounts are especially great for small businesses with low monthly credit card processing volume. They also offer free equipment and exceptional customer service!


If your business only accepts online payments, merchant account services from PayPal are a great option. They're also famous for their extensive knowledge of internet sales tax laws and how to work with international merchants.


Online sellers are in for a treat with Stripe merchant services. Stripe provides merchant accounts with affordable payment processing, no monthly fees, and low credit card transaction rates.

Stripe merchant account services are excellent for online business owners who need to accept credit card payments without hassles or hidden fees.

What are merchant account costs?

When you set up a merchant account, the merchant service provider will overview all the fees involved. Fees from merchant service providers include:

  • Transaction fees — merchant service providers will charge you a transaction fee for each payment processed.
  • Equipment fees — merchant service providers may charge equipment fees for merchant ID numbers, payment terminals, and other hardware.
  • Monthly minimums — some merchant account providers have monthly minimums that are required to keep your merchant account open.

What do you need to get a merchant account?

Your merchant account provider (or acquiring bank) will need to know what business type you are, where your business operates, and how much credit card processing volume you do per month. The merchant service provider will provide an application for you to fill out that includes the costs associated with their services.

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Frequently Asked Questions

How do I open a merchant account?

When you sign up for a merchant account with a service provider or acquiring bank, they will provide you with merchant ID numbers and walk you through the merchant application process. They can open most merchant accounts in less than 24 hours.

While some providers only offer merchant account services in specific countries, others work with international clients. If you run a global business, make sure to find a provider that works with your country of choice to avoid any processing fees.

What is required for a merchant account?

When signing up for services with a provider, you will need two forms of identification and proof of your business. The merchant provider may also ask for title deeds, records of incorporation documents, or other related documentation.

Is a merchant account the same as a bank account?

Your merchant service provider and merchant account are not the same as your personal bank account. Merchant accounts receive and send payments, but money isn't moved in the same way — these accounts are for merchant services only.

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