What Is a Merchant Account?

A merchant account is an account held with an acquiring bank that allows you to accept card payments and receive settlement. It is not a business bank account: funds pass through it, are netted against refunds, fees and any reserve, and are then paid out to your ordinary bank account.

Dedicated MID or aggregated account

Dedicated merchant account (own MID)

Underwritten specifically for your business. Slower to open, but you get your own descriptor, negotiated pricing and far more stability if volumes grow or spike.

Aggregated (sub-merchant) account

You process under a facilitator's master account. Onboarding is quick and self-service, but acceptance can be withdrawn at short notice if your profile no longer fits the master policy.

What affects approval

Industry and MCC, plus any licence the category requires.
Company registration country and the markets you sell to.
Monthly volume, average ticket and largest expected transaction.
Trading history, chargeback ratio and refund rate.
Delivery lag between payment and fulfilment.
Ownership, KYC and source-of-funds documentation.

Terms worth reading closely

Reserve type, percentage and release schedule.
Settlement frequency and currency, plus FX margin.
Chargeback fees and monitoring thresholds.
Volume caps and what happens when you exceed them.
Notice period and termination conditions.

What is an acquirer?

An acquiring bank is licensed by the card schemes to accept card transactions on your behalf, holds your merchant account, and settles the funds to your bank. It also carries the financial risk if you cannot refund your customers, which is why the acquirer, not the gateway, decides whether you are accepted.

Rolling reserve

A rolling reserve is a percentage of each settlement that your acquirer holds for a fixed period before releasing it. It exists to cover refunds and chargebacks the acquirer might otherwise have to fund, and it directly affects your working capital.

Chargeback ratio

Chargeback ratio is the number of chargebacks in a month divided by the transactions or volume in that period, expressed as a percentage. It is the metric acquirers watch most closely, because card schemes place merchants above their thresholds into monitoring programmes with fees and remediation requirements.

MCC codes

A merchant category code is a four-digit code that classifies what your business sells. Your acquirer assigns it during onboarding, and it influences interchange, whether issuers approve your transactions, and which acquiring programmes you are eligible for.

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Nothing is shared with a provider until you submit your onboarding pack. Approval is always the provider's decision.