--- title: "Merchant Account: What Is It?" description: Learn what is a merchant account and ask these eight questions to weed out unethical providers. image: https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/merchant-account.svg --- [tel:1-800-601-0230](tel:1-800-601-0230) 800-601-0230 - Features - Solutions - Developers - [Pricing](https://www.payjunction.com/payments/pricing.html) - Resources [See a Demo](https://www2.payjunction.com/tour-payjunction) Features - EXPLORE PRODUCTS [No-code Payments Integration®](https://www.payjunction.com/payments/no-code-payments-integration.html) [ZeroTouch Terminal](https://www.payjunction.com/payments/smart-terminal.html) [Portable Terminal](https://www.payjunction.com/payments/portable-credit-card-reader-terminal.html) - ACCEPT PAYMENTS [Invoices](https://www.payjunction.com/payments/electronic-invoices.html) [ACH Electronic Checks](https://www.payjunction.com/payments/ach-payments.html) [SmartSurcharge®](https://www.payjunction.com/payments/smart-surcharge.html) [Cards on File](https://www.payjunction.com/payments/store-credit-card-info.html) [Rapid Refunds](https://www.payjunction.com/payments/credit-card-refund.html) [Recurring Billing](https://www.payjunction.com/payments/recurring-payments.html) [Ecommerce](https://www.payjunction.com/payments/ecommerce-merchant-services.html) [Mobile App](https://itunes.apple.com/us/app/payjunction/id1324839420?ls=1&mt=8) - EXPLORE CAPABILITIES [Overview](https://www.payjunction.com/payments/payment-processing-solutions.html) [Integration Marketplace](https://integrations.payjunction.com/) [Remote Signature](https://www.payjunction.com/payments/signature-capture.html) [Multi-Location](https://www.payjunction.com/payments/enterprise-payments.html) [Sales Reports](https://www.payjunction.com/payments/sales-reports.html) [Search and Export](https://www.payjunction.com/payments/transaction-history-search.html) [Customization](https://www.payjunction.com/payments/custom-payment-software.html) Solutions - [Veterinary Streamline payment workflows and get paid faster with up-front deposits and payment schedules for high-cost procedures. 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No sweat, we’ve got you covered. ## What Is a Merchant Account? A merchant account enables a business to accept credit and debit card payments in exchange for its products or services. Funds are directly deposited into the business’s bank account and fees are automatically debited from the same account. True merchant accounts are backed by a direct agreement between a Merchant Service Provider and a bank, providing more pricing plan options to businesses. Every account is subject to fees covering the provider’s services, costs to maintain the account and the wholesale costs to run cards. These accounts are as important to businesses as electricity, but there are many pitfalls when it comes to selecting this vital utility for your business. ## Payment Processing Demo Schedule 15 minutes with a payments expert Get a customized PayJunction product walk-through Understand requirements and pricing Determine your SAVINGS! GET DEMO NOW To truly understand them, it's important to address these additional questions: 1. ## Does a merchant account require a contract? The majority of providers [lock businesses into contracts](https://blog.payjunction.com/contract-terms-unethical-billing/) spanning anywhere from two to six years. Unethical providers often fail to mention early termination and auto-renew clauses within their contracts. If you’re considering an account and are faced with a contract, be sure to look for these two terms. If you don’t have the time to apply for an account, you can opt to work with a [Payment Facilitator](https://blog.payjunction.com/credit-card-processing-middlemen/), such as PayPal or Square. But, be warned, a PayPal or Square account lacks the benefits a true merchant account provides. If you’re a larger business, stay away from this option because it often leads to long hold times on your funds and expensive transactional costs due to a Flat rate plan. The ideal account requires no long-term contract and offers month-to-month service. With exceptional products and services, the provider should earn your business every month and not penalize you if you wish to end the partnership. 2. ## What equipment options do I have? There are two types of terminals to avoid when it comes to equipment: leased terminals and outdated terminals. [Leased terminals](https://blog.payjunction.com/credit-card-terminal-leasing-unethical-billing/) are falsely advertised as the cheapest option but will actually cost you more than purchasing the terminal when the length of the lease is considered. The ideal terminal is a month-to-month rental with no strings attached. [Outdated terminals](https://blog.payjunction.com/credit-card-reader-outdated/) are just as bad. They limit the payment types you can accept, slow down your business and increase your vulnerability to fraud. The best equipment option for your account is a Smart Terminal. These future-proof terminals automatically update their software so you never miss out on the latest technology or payment methods. 3. ## What are the rate plan options? There are three typical rate plans: Flat, Tiered and Interchange-Plus. Each provides its own [unique benefits](https://blog.payjunction.com/best-credit-card-processing-plan/) depending on your business. As we mentioned before, if you’re a large, established business Flat pricing is not right for you. We recommend Interchange-Plus for the most transparent pricing. Some providers offer a fourth rate plan option: [Billback](https://blog.payjunction.com/billback-unethical-billing/). Any variation of Billback is bad for business. Unethical providers offer an appealingly low rate up front but fail to mention what’s to follow … more fees than you anticipated. 4. ## Will I get the best processing rates? [Merchant credit card processing](https://blog.payjunction.com/merchant-credit-card-processing/) rates are determined by a [number of factors](https://blog.payjunction.com/credit-card-processing-fees/), some of which you can control and others you cannot. Unfortunately there are providers that profit from you not knowing what you can control to decrease your rates, which results in transaction [downgrades](https://blog.payjunction.com/interchange-downgrades-unethical-billing/) and more money out of your pocket. Your provider should offer exemplary customer service, let you know what you can do to improve your payment practices and offer you the best technology available to ensure your business is as efficient as it can be.  5. ## How will the merchant account deal with processing over the anticipated volume? Every provider sets processing limits. Typically if you process more than the anticipated volume limit, your provider will need to verify the amount before approving the large transaction. Some providers don’t stop you from processing over your limits, but will [charge a markup on your processing volume](https://blog.payjunction.com/volume-fee-unethical-billing/). If providers claim there is no processing volume limit, they most likely are charging you for it. 6. ## Will I pay the true cost for regulated fees? Interchange and dues and assessments are wholesale costs established by card brands (Visa, MasterCard, Discover, Amex) which your provider will pass onto you. Since these fees are regulated by the card brands and not providers, they are the same for every business. However, unethical providers will take advantage of the complexity of merchant statements and charge [padded Interchange](https://blog.payjunction.com/interchange-padded-unethical-billing/) or [padded dues and assessments](https://blog.payjunction.com/credit-card-assessment-fees-unethical-billing/) and create another revenue stream for themselves. 7. ## What other fees will I pay? Providers love to pack in extra fees that cover services they claim are unique to them. The truth is that most of these fees are unnecessary and are solely another means of income. We found [six common unnecessary fees](https://blog.payjunction.com/merchant-service-fees-unethical-billing/) that you can easily avoid if you select the best option. ## Becoming A Pro Are you ready to compare providers with confidence? We hope so! If you still have lingering questions regarding what is a merchant account, don’t be shy — we’d love to help you more. Just fill out the form below and we’ll have a specialist contact you. ## Find out if you're a victim of unethical billing with our free checklist! Are you confident in answering what is a merchant account now? We'd love to hear from you! *Editor's Note: This post was originally published in October 2016 and has been updated for comprehensiveness and accuracy.*   [Merchant Account](https://blog.payjunction.com/topic/merchant-account) [Questions and Answers](https://blog.payjunction.com/topic/questions-and-answers) --- ##### [![Credit Card Fraud in America Today](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/credit-card-fraud.svg) Credit Card Fraud in America Today](https://blog.payjunction.com/credit-card-fraud) ##### [![Merchant Service Provider: Choosing The Best for Your Business Size](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/merchant-service-provider.svg) Merchant Service Provider: Choosing The Best for Your Business Size](https://blog.payjunction.com/merchant-service-provider) ###### About Author ![Picture of Ursula Librizzi](https://blog.payjunction.com/hs-fs/hubfs/Ursula_Librizzi.jpg?width=200&height=200&name=Ursula_Librizzi.jpg) ### Ursula Librizzi Ursula is the sales and marketing operations manager for PayJunction. She oversees daily marketing tasks and liaises between the sales and marketing departments. ###### Related Posts ## [![What Is a Monthly Minimum Fee?](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/monthly-minimum-fee.svg) What Is a Monthly Minimum Fee? It’s said there’s no such thing as a free lunch, and the adage definitely holds true for the payments space. Whenever a service is rendered, it generally comes at a cost, which is why Merchant Account Providers charge monthly minimum fees.](https://blog.payjunction.com/monthly-minimum-fee) ## [![Improper Merchant Underwriting Directly Affects Your Business](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/merchant-underwriting-unethical-billing.svg) Improper Merchant Underwriting Directly Affects Your Business To get a traditional merchant account, your business must go through an extensive review process called merchant underwriting. Unfortunately some Merchant Account Providers don’t effectively underwrite businesses, which can lead to issues down the line.](https://blog.payjunction.com/merchant-underwriting-unethical-billing) ## [![What Does Credit Card Processing Cost?](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/credit-card-processing-cost.svg) What Does Credit Card Processing Cost? There are a number of payment providers that enable you to accept credit cards. Whether you interact with them directly or not, there are a handful of fees you have to pay for the privilege of accepting plastic.](https://blog.payjunction.com/credit-card-processing-cost) ## Meet a Payment System You’ll Love - ###### FEATURES [No-code Payments Integration®](https://www.payjunction.com/payments/no-code-payments-integration.html) [ZeroTouch Terminal](https://www.payjunction.com/payments/smart-terminal.html) [Portable Terminal](https://www.payjunction.com/payments/portable-credit-card-reader-terminal.html) [Invoices](https://www.payjunction.com/payments/electronic-invoices.html) [ACH](https://www.payjunction.com/payments/ach-payments.html) [SmartSurcharge®](https://www.payjunction.com/payments/smart-surcharge.html) [Cards on File](https://www.payjunction.com/payments/store-credit-card-info.html) [Recurring Billing](https://www.payjunction.com/payments/recurring-payments.html) - [Ecommerce](https://www.payjunction.com/payments/ecommerce-merchant-services.html) [Customization](https://www.payjunction.com/payments/custom-payment-software.html) [Remote Signatures](https://www.payjunction.com/payments/signature-capture.html) [Rapid Refunds](https://www.payjunction.com/payments/credit-card-refund.html) [Multi-Location](https://www.payjunction.com/payments/enterprise-payments.html) [Sales Reports](https://www.payjunction.com/payments/sales-reports.html) [Search and Export](https://www.payjunction.com/payments/transaction-history-search.html) [Mobile App](https://itunes.apple.com/us/app/payjunction/id1324839420?ls=1&mt=8) - ###### BUSINESS SOLUTIONS [Auto Dealers](https://www2.payjunction.com/automotive-merchant-services) [Veterinary](https://www2.payjunction.com/payment-processing-veterinarians) [Dentistry](https://www2.payjunction.com/payment-processing-dentists) - ###### RESOURCES [Product Overview](https://www.payjunction.com/payments/payment-processing-solutions.html) [Integrations](https://integrations.payjunction.com/) [Blog](https://blog.payjunction.com/) [Guides](https://guides.payjunction.com/) [Support](https://support.payjunction.com/) [Service Status](https://status.payjunction.com/) [Tutorials](https://blog.payjunction.com/tag/pj-university/) [API](https://www.payjunction.com/payments/payment-api.html) - [Trust Center](https://trust.payjunction.com/) [Request a Demo](https://www2.payjunction.com/payjunction-demo) [Pricing](https://www.payjunction.com/payments/pricing.html) [About Us](https://www.payjunction.com/payments/about.html) [Careers *HIRING*](https://www2.payjunction.com/careers) [Press](https://media.payjunction.com/) - ###### RESOURCES [Integrations](https://integrations.payjunction.com/) [Guides](https://guides.payjunction.com/) [Tutorials](https://blog.payjunction.com/tag/pj-university/) [API](https://www.payjunction.com/payments/payment-api.html) [Request a Demo](https://www2.payjunction.com/payjunction-demo) [About Us](https://www.payjunction.com/payments/about.html) [Careers *HIRING*](https://www2.payjunction.com/careers) [Press](https://media.payjunction.com/) [Trust Center](https://trust.payjunction.com/) [Service Status](https://status.payjunction.com/) - ###### BUSINESS SOLUTIONS [Auto Dealers](https://www2.payjunction.com/automotive-merchant-services) [Veterinary](https://www2.payjunction.com/payment-processing-veterinarians) [Dentistry](https://www2.payjunction.com/payment-processing-dentists) ##### 800-601-0230 SIGN UP FOR OUR NEWSLETTER  Become a better advocate for your business. 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