Updated
GL-M-05
Glossary · Banks and finance
Merchant account - accepting card payments, where the bank holds a reserve and watches chargebacks
01 / In 30 seconds
The short answer
- What it is
- A special account for accepting payments from customers by card and online
- Who needs it
- A business that accepts payment by card or through a website
- How it differs
- It is not an ordinary current account: money arrives via acquiring with a delay
- What is checked
- The type of activity, turnover, reputation, level of refunds
- The main risk
- A high share of chargebacks is grounds for closure
02 / In plain words
What Merchant account means
A merchant account is a special account for accepting payments from customers: by card in a shop, online on a website, through payment links. Put simply: an ordinary current account is for making payments and receiving transfers, while a merchant account is for accepting payment from customers.
It works through acquiring: the payment passes through a payment system, the acquiring bank deducts a fee, and the money reaches the business not instantly but with a delay. The bank may hold part of the turnover in reserve — in case of refunds and disputes. The terms depend on the type of activity and the assessed risk.
For international business this is a sensitive subject. Banks and providers look closely at the field of activity, the geography of customers, turnover and the level of chargebacks. High-risk industries get more expensive terms or a refusal, and exceeding the chargeback ratio is a typical ground for closing a merchant account.
A case from practice
A company’s merchant account was closed because of a rise in chargebacks, and sales stopped for several weeks. After that the operation was restructured: a second provider was connected, and disputed orders began to be resolved before the customer went to the bank.
Who needs a merchant account
- An online shop
- A subscription online service
- A retail outlet accepting cards
- Tourism and education businesses
- International sales
- A platform accepting payments
03 / What it covers
What the provider assesses
Business
- Type of activity
- Turnover and average ticket
- Customer geography
Money
- The acquiring fee
- Crediting time
- A reserve on turnover
Risk
- The share of refunds
- Customer complaints
- A high-risk industry
Company
- Ownership structure
- Beneficial owners (KYB)
- Licences where required
04 / How it works
How a merchant account is opened
Preparing the company documents
Constitutional documents, website, business description.
Checking the business and beneficial owners
The bank checks the company and its owners.
Agreeing tariffs and the reserve
Fees, reserve and payout times.
Technical integration
Connecting the payment form or terminal.
Accepting payments
Payments come in and chargebacks are under control.
05 / Key facts
What you need to know
01What it is
An account for taking payments
Cards in store, online on a website, payment links. It does not replace a current account.
02How money arrives
With a delay
The payment goes through acquiring; the bank deducts a fee and sometimes a reserve for refunds.
03What is checked
Business and owners
The line of business, client geography, turnover and chargeback levels.
04Main risk
The chargeback ratio
Exceeding the permitted ratio leads to fines and account closure.
Common mistakes
Hiding the real line of business
Describe the business accurately: a mismatch will be found and the account closed.
Not allowing for the reserve and delay
Build them into your cash flow plan.
Working without a backup provider
Connect a second provider in case of a block.
06 / Expert advice
How to prepare in advance
Before applying, the company documents and ownership structure are put in order, the type of activity is described honestly and a description of the business model is prepared: what is sold, to whom, with what delivery times. Handling refunds is thought through separately — it is the chargeback ratio that most often kills a merchant account. A back-up provider reduces the risk of sales stopping.
What we do for you. If a business is the basis of your income and of evidencing the source of funds, its payment infrastructure becomes part of the immigration picture. We help put the documents and ownership structure in order so that they withstand both the bank’s check and the programme’s due diligence.
Klara RihterBanking compliance and source of funds specialist
07 / Questions
Frequently asked questions
A current account is for the company’s payments and transfers; a merchant account is for accepting payments from customers by card and online through acquiring.
The payment passes through the payment system and the acquirer, and part of the turnover may be held in reserve in case of refunds and disputes.
A field with a high share of refunds and complaints. For it the terms are more expensive and the requirements stricter, and sometimes the provider simply refuses.
Most often because of a rising share of chargebacks, a mismatch between the declared and the actual activity, or customer complaints.
Preferably. Losing the only channel for accepting payments stops sales instantly, and connecting a new one takes weeks.
Indirectly, yes. If the business is your source of income, its transparency and documents will be checked when you evidence the source of funds.
INITIAL ASSESSMENT
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