Merchant Account
Definition
A merchant account is a specialized bank account that allows a business to accept credit and debit card payments from customers.
What Merchant Account Means for Your Business
What it means
A merchant account sits between the card networks and the business bank account. When a customer swipes or taps a card, the funds flow first into the merchant account, then settle into the operating account usually 1 to 2 business days later.
Why it matters
Without a merchant account, you cannot take cards. And with the wrong merchant account, you pay too much or get locked into contracts that punish you for growing.
How contractors use it
Shops pick a merchant account based on monthly volume, average ticket size, and industry risk. Field service is considered low risk, which helps in negotiating rates. Good software integrates the merchant account directly into invoicing and payment collection.
Real-World Example
A commercial HVAC contractor switched merchant accounts and dropped effective processing cost from 3.1% to 2.3% on $1.8 million in annual card volume, saving $14,400 per year.
Related Terms
Interchange Fee
An interchange fee is the portion of a credit card processing fee that the merchant pays to the card-issuing bank on every transaction.
Transaction Fee
A transaction fee is the per-transaction charge a payment processor adds on top of the percentage rate when a customer pays with a credit or debit card.
Chargeback
A chargeback is a forced reversal of a credit card payment initiated by the customer's bank, usually because the customer disputes the charge.
Customer Financing
Customer financing offers homeowners a loan or payment plan to cover a large repair or replacement, turning a single big invoice into monthly payments.
Accounts Receivable
Accounts receivable is the total amount of money owed to a business by customers for services already delivered but not yet paid.
Put This Into Practice with Free Software
Kaldr Tech handles merchant account and everything else you need to run your shop. $0/month, 3.5% + 30¢ per transaction.