Merchant Accounts

Start accepting debit and credit card payments from your customers with a merchant account.

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To accept card payments, you need a merchant account

Without a merchant account, you won’t be able to accept credit card payments – it’s really that simple.

And every bricks and mortar store or ecommerce site should be accepting credit and debit card payments if they want to appeal to the modern-day customer. Still not convinced? In July alone, there were 1.5 billion debit card transactions and 261 million credit card transactions in the UK.

That’s a lot of spending on a little piece of plastic.

Appeal to more customers and grow your business

By not offering your customers the chance to pay by card, you’re cutting out a whole load of potential customers for your business. Card payments are so much easier than paying by cash, cheque or any other means.

What is a merchant account? How does a merchant account work? What are the different types of merchant accounts? Ways to take card payments with a merchant account Why have a merchant account for your business? Can I accept credit cards without a merchant account? What is a Merchant ID? Can you get a merchant account with bad credit?

What is a merchant account?

A merchant account is basically a bank account which facilitates the safe and secure processing of card payment transactions. A merchant account holds the customer’s payment for you while they check your customer has adequate funds to pay for the goods.

This process helps to prevent fraud, so you can sleep easy knowing all payments are bonafide.

If you want to process any card payments, you’ll need a merchant account. And we’re not just talking UK payments, you’ll need a merchant account to process international card payments, too.

How does a merchant account work?

Once a customer pays for something on a card, the money is sent to an acquiring bank to hold while other checks are made to see if the customer has the funds. The card provider, e.g. Mastercard, makes these checks. After the payment is processed and the funds go through, they’ll land in your business bank account.

A merchant account, although a type of bank account, is not a business bank account – it’s an entirely separate account. You will still receive funds into your own business bank account.

What are the different types of merchant accounts?

We’re going to talk you through three types of merchant accounts, an aggregate merchant account, a dedicated merchant account and a high-risk merchant account. Read about each account type below.

Aggregate merchant accounts

Payment facilitators offer this service which groups similar businesses in an aggregated merchant account. This type of arrangement can mean better rates for small and medium companies. The downside is that you don’t have as much control over when you receive funds.

Dedicated merchant accounts

A dedicated merchant account is an account set up just for your business. Payments are processed quicker than with an aggregate merchant account, and you can negotiate specific rates for your business.

High-risk merchant accounts

These merchants accounts are specifically designed for businesses deemed ‘high-risk’. Although there are fewer providers to choose from, there are providers out there that can cater to your business needs. If you’re deemed ‘high-risk’ it might be that your business hasn’t been running long or directors have declared bankruptcy in the past.

Ways to take card payments with a merchant account

You can accept card payments through a card machine (chip and PIN, contactless), through an EPOS system, over the phone or online through your ecommerce website.

Why have a merchant account for your business?

Well, if you’re thinking about accepting any kind of card payments – whether that’s credit or debit cards, you’ll need a merchant account. It’s the most secure way to process your customer’s payment.

You’ll likely appeal to more customers if you’re offering alternative payment options to cash, too. Most of us carry around a credit or debit card, so with a merchant account, you can appeal to any last-minute buyers or impulse purchases at your till.

Can I accept credit cards without a merchant account?

Yes, you can accept card payments without a dedicated merchant account. It’s known as a payment facilitator, or aggregated merchant account. This type “aggregates” all business seller accounts into one large single merchant account. Many providers offer this service, such as PayPal or Shopify.

It’s still technically a merchant account but your business does not need to apply for its own merchant account and merchant ID as with an individual merchant account.

What is a Merchant ID?

A merchant ID, also known as a MID, is a unique reference number provided to you, the merchant by the acquiring bank. It is used to identify your merchant payment account and all your processing activities.

Can you get a merchant account with bad credit?

Yes, it is possible to get a merchant account with bad credit or no credit at all. Although it is more challenging to get approved, there are merchant account providers who will supply their services. However, expect much higher rates.