Is a Business Account the Same as a Merchant Account?

Business or Merchant Account

New business owners have a lot to do to set up their finances and start accepting payments from customers. Two tasks are to open a business bank account and a merchant account. While these sound like similar accounts, they serve very different purposes and you need both to accept payments smoothly.

In this guide, we’ll explain what business accounts and merchant accounts are and how they differ.

What Is a Business Bank Account?

A business bank account is a current account that can hold all of your business’s funds. You can use it as a repository for incoming payments and your source of funds for paying bills and wages.

Business bank accounts work similarly to personal current accounts in most respects. However, it’s important to have a business bank account so that you never mix personal and business cash.

What Is a Merchant Account?

A merchant account is a special type of account that allows you to accept payments to your business. Its purpose is not to store funds, however.

When you accept a card payment from a customer online or with a credit card machine, the bank that issued the customer’s card sends the funds to your merchant account. The bank that holds your merchant account—known as the acquiring bank—then forwards the money to your business bank account, usually within a day or two.


Looking to open a merchant account? It’s a good idea to read our guide on how to open a merchant account in seven steps.

Why Can’t You Accept Payments with a Business Account?

You might feel tempted to accept payments straight to your business bank account and skip the merchant account altogether. However, that doesn’t work because payments would process too slowly for most businesses.

When a customer makes a payment to your business, the acquiring bank essentially advances you the money from the payment. The bank that issued the customer’s card has to vet the transaction before releasing funds, which can take several days.

Acquiring banks are set up to take on the risk that stems from this delay. They can handle losses that result from the occasional fraudulent transaction without suffering badly.

Banks that offer business bank accounts, on the other hand, aren’t set up for this kind of risk. If you were to send funds from a card payment directly to a business bank account, it could take days to get paid for a sale.

Business Account vs. Merchant Account: How They Compare

Business accounts and merchant accounts work very differently. Let’s take a closer look at how they compare across key functions.

Access to Funds

A business bank account is designed to give you easy access to your business’s funds. You can make withdrawals, send payments, and more.

In contrast, you never actually have access to funds as they’re moving through a merchant account. Instead, they’re automatically passed on to your business bank account.

Speed of Payment

Funds from a sale are typically sent from your merchant account to your business account within one to two days. The money is an advance from the acquiring bank.

Funds from the bank that issued the customer’s credit card reach the acquiring bank several days after a sale. You never actually see this money since it’s used to repay the acquiring bank for the advance it gave you.

Approval Requirements

It’s relatively easy to get a business bank account. You just need a registered business along with proof of ID and proof of address.

It’s more complex to get a merchant account. You usually need to provide details about your business’s revenue and submit to a credit check. Some merchant account providers may not work with businesses that are brand new or with business owners who have had a bankruptcy in the past.


Many banks offer business bank accounts at no charge as long as you keep a minimum monthly balance. Other banks charge a small monthly fee.

Merchant accounts typically have higher monthly fees. You may also pay a fee for each transaction processed on behalf of your business. These fees cover the acquiring bank’s risk in advancing funds to your business.

Multiple Merchant Accounts?

Are you interested in having multiple merchant accounts? It’s definitely possible, but is it something we recommend? All those questions and more, answered in our article.


To accept credit card payments at your business, you’ll need both a business account and a merchant account. A business bank account offers a safe place to store all of your business’s funds. A merchant account allows you to get paid quickly after sales. The two accounts function differently and are designed to work together.

Frequently Asked Questions

Is a merchant account a bank account?
A merchant account is a special type of bank account designed to enable businesses to accept credit and debit card payments. Unlike a current account, you cannot access the funds in a merchant account. Instead, funds pass through a merchant account on their way to a business bank account.
What credit score do I need to get a merchant account?
Merchant account providers typically work with business owners who have at least a 500 credit score with Experian or the equivalent with another credit rating agency. You may be able to find merchant account providers that specialize in working with business owners with poor credit.
Is a business account free?
Many UK banks now offer free business bank accounts. However, business owners may need to meet a minimum balance requirement to avoid monthly fees.
Written by:
Michael is a prolific business and B2B tech writer whose articles have been published on many well-known sites, including TechRadar Pro, Business Insider and Tom's Guide. Over the past six years, he has kept readers up-to-date with the latest business technology, corporate finance matters and emerging business trends. A successful small business owner and entrepreneur, Michael has his finger firmly on the pulse of B2B tech, finance and business.