Accept payments
What a merchant account is, and how to get one
A merchant account is the processing account that lets a business accept card payments. Card-scheme funds arrive there after authorisation and clearing, fees and refunds are netted off, and the rest is settled to your ordinary business bank account. Money flows through it rather than sitting in it.
Where the money actually goes
Most businesses meet merchant accounts by needing one, usually at the point where taking card payments stops being optional. It is one of the few pieces of financial plumbing that stays invisible until it either arrives or gets refused.
- Customertaps or pays
- AUTHORISATIONGatewaycaptures the card
- CLEARINGAcquirerauthorises, clears
- Merchant accountfees netted off
- SETTLEMENTYour bankyou spend from here
The merchant account is the staging post, not the destination.
Money passes through it. You bank from the account at the end.
Three things happen between your customer tapping and you being paid. Authorisation asks the card issuer whether the money is there and reserves it. Clearing is the schemes reconciling who owes what. Settlement is the acquirer paying you what is left after the fees and refunds have come out. The merchant account is where that last step happens.
Why it is not a business bank account
Merchant account
money passes throughFees and refunds come out here. You do not bank from it.
Business bank account
money sitsSuppliers, payroll, everything else. This is the one you spend from.
This is the distinction everything else on the page rests on, and it is the one most often missed.
A business bank account holds your money so you can spend it. A merchant account does something narrower: it exists so an acquirer can receive funds from the card schemes on your behalf, take out what it is owed, handle refunds and chargebacks, and pass on the rest. You do not bank from it, and you do not pay suppliers from it. The balance you see is a staging post, not a treasury.
That explains most of what follows. Because the account exists to process rather than to hold, the institution providing it is exposed to what happens after the money moves, which is where underwriting comes in.
A gateway is a third thing again: it captures the card at your checkout and passes the transaction on, while the merchant account is where the money lands. How the gateway fits →
The two kinds you can get
A dedicated merchant account gives your business its own merchant ID with the acquirer, underwritten for you specifically. An aggregate account puts you behind one shared merchant ID along with thousands of other businesses. That is why an aggregator can onboard you in minutes: nobody has assessed you yet.
It is also why those accounts close abruptly. The assessment still happens, just after you have started trading and usually triggered by a volume spike or a dispute. Being removed from a shared MID takes about as long as joining it did. A dedicated account is slower to obtain and considerably harder to lose, and that trade is the whole decision.
Dedicated
Underwritten for you, and yours.
Aggregate
Quick to join, quick to be removed from.
What it costs
Four separate deductions come out of a card payment. Your provider sets one of them.
We quote per business rather than publish a rate card, and the reason is not coyness. A headline rate that ignores your card mix, your average transaction value and your chargeback profile is a number you could not actually transact at. Every category above gets named and explained before you commit, including the ones nobody volunteers.
- Interchange
Paid to the bank that issued your customer’s card. Capped by law in the UK and EU for consumer cards, uncapped for commercial and non-UK ones. Your provider does not set it and cannot discount it.
- Scheme fees
Paid to Visa or Mastercard for using the network. Dozens of separate line items, set by the schemes, changed twice a year. Also not your provider’s to set.
- Acquirer margin
The part your provider actually earns, and the only part that is genuinely negotiable. On an interchange-plus quote it is the "plus". On a blended rate it is invisible, which is the point of a blended rate.
- Account and service fees
Monthly minimums, gateway fees, PCI compliance charges, authorisation fees per transaction, chargeback fees per dispute, and sometimes an early termination fee. Individually small, collectively the difference between two quotes with the same headline rate.
What underwriting
is really assessing
The questions feel like a credit check and they are not. An acquirer is not mainly worried about whether you can pay it. It is worried about your customers charging payments back after you have been settled.
When that happens the money is taken back from the merchant. If the merchant no longer has it, or no longer exists, the acquirer covers it. Every question in the application is a way of sizing that exposure.
Which is why the questions cluster where they do. What do you sell, because disputes vary enormously by category. When do you deliver it, because a customer who pays in January for a holiday in August has seven months in which to dispute. What is your average transaction value, because one large disputed sale can matter more than a hundred small ones. What is your trading history, because a chargeback record is the most direct evidence available.
Read that way, the process stops feeling arbitrary. It also tells you how to approach it: the businesses that get through quickly are not the safest ones, they are the ones that answered clearly.
Reserves, and why they
are not a punishment
A reserve is money held back from your settlements to cover disputes that arrive later. It is the most common source of unpleasant surprise in a merchant agreement, mostly because nobody explains it before signing.
A rolling reserve holds a percentage of each settlement for a fixed period, then releases it, rolling forward continuously. After the first cycle you are settled normally minus the current holding. A fixed reserve holds an agreed sum once. A capped reserve builds to a ceiling and stops.
None of these means the acquirer distrusts you specifically. They are standard where delivery is distant or disputes are historically elevated, which is why travel, events and subscriptions see them most.
What matters is the detail, and it should be in writing before you sign: the percentage, the hold period, whether it is capped, and above all what would cause it to be reduced or released. A reserve with no stated route out is a worse commercial term than a higher rate, and it is the term least likely to come up in a sales conversation.
Held backPaid to you
HOLD PERIOD
Month 1’s holding is released in month 4, and so on, rolling forward. That is a 90-day hold, the short end of the 90 to 180 days these commonly run.
A fixed reserve holds a sum once. A capped reserve builds to a ceiling and stops.
If your bank said no
A decline from a high-street provider is usually a decline by category rather than by business.
A category decline is not a verdict on your company.
Large acquirers score merchant category codes, because at the volume they onboard they cannot assess each applicant individually and stay profitable. If your code carries elevated disputes or regulatory exposure across the industry, you inherit that on the day you apply, regardless of how you personally trade.
Specialist underwriting works the other way round: it starts from the business. Licences where the sector needs them, actual trading history, your real chargeback ratio, the controls you run, and who is behind the company. It takes longer because somebody is genuinely reading it.
If you have been declined, the useful thing to establish is which of the two happened. A category decline is not a verdict on your company, and it does not follow you the way a termination for cause does.
What providers mean by high risk → · Already having payment problems →
Getting one in the UK
Through VIP360 there is one application, one underwriting decision and one relationship, on the rails of licensed acquirers.
Underwritten on your merits
Your history, your chargeback profile, your compliance: assessed properly up front, so the account is built to last rather than policed after the fact.
One integration for everything
Cards, wallets, open banking and local payment methods through a single API, with 3DS2 and SCA handled for you.
Settle in the currencies you sell in
Get paid in 40+ currencies on the acquiring network, with statements your finance team can reconcile to the penny.
A person, not a queue
One named specialist from first call to go-live, and they stay your contact after it.
What to have ready
The application moves at the speed of your worst-prepared document.
- Corporate documents and ownership detail, down to the beneficial owners.
- Identification for directors.
- Your website, or a description of the product where there is no site yet.
- Processing history and chargeback ratios, if you have any.
- A clear description of how money moves through the business.
That last one is where most applications are thin, and it is the one underwriters care about most. Who pays you, what for, how much on average, how often, from which countries, and how long after payment they receive what they bought. A business that can answer that in a paragraph will get through faster than one with better numbers and a vaguer story.
Being candid about the awkward parts helps rather than hurts. Underwriters find the problems eventually, and a disclosed one is a condition on the account, while a discovered one is a closed account.
Selling online, by subscription or into travel? See who we serve.
Frequently asked questions
A merchant account is a processing account that lets a business accept card payments. Card-scheme funds arrive there after authorisation and clearing, fees and refunds are netted off, and the remainder is settled to your ordinary business bank account on an agreed cycle. Money flows through it rather than sitting in it, which is why it is held with an acquirer rather than a bank you spend from.
No. A business bank account holds money for you to spend from. A merchant account exists so an acquirer can receive card-scheme funds on your behalf, net off fees, handle refunds and disputes, and settle you the remainder. You do not pay suppliers or run payroll from it. Money passes through it on the way to the account you actually bank from.
Usually both, and they do different jobs. The gateway captures the card at the checkout and passes the transaction on. The merchant account is where the money lands once the acquirer has authorised and cleared it. Some providers sell them bundled, which is convenient but makes it harder to see what each part costs.
It depends almost entirely on your paperwork rather than the provider. Through VIP360 you can be live in as little as 48 hours, subject to all relevant documentation. An incomplete application, or a business whose model needs explaining, takes as long as it takes to answer the questions. The single biggest cause of delay is a flow-of-funds description that does not make sense to an underwriter.
Because the acquirer is carrying real financial risk on your behalf. If a customer charges back after you have been paid and your business cannot cover it, the acquirer does. That exposure is the reason for the questions, the reason some sectors are harder, and the reason reserves exist. Read the process as the acquirer sizing a liability rather than judging your business.
A percentage of your takings held back for a set period and then released, rolling forward continuously. It exists so there is money available if disputes arrive after you have been settled. It is common in sectors with long delivery windows or elevated chargebacks. What matters is that the percentage, the hold period and the conditions for reducing it are all stated in writing before you sign.
Four things come out of every card payment: interchange to the card issuer, scheme fees to Visa or Mastercard, your provider’s own margin, and account or service fees such as monthly minimums, gateway and PCI charges. Your provider sets only one of those four. We quote per business rather than publish a rate card, and every category is named and explained before you commit.
Often, yes, because the two decisions are made differently. A bank frequently declines by category, scoring your merchant category code rather than your business. Specialist underwriting assesses the actual business: licences, trading history, chargeback record and the controls you run. A decline by category is not a verdict on the company.
A dedicated account gives your business its own merchant ID with the acquirer, underwritten for you. An aggregate account places you behind a shared merchant ID with many other businesses, which is why it can be opened in minutes and why it can be withdrawn in minutes too. Dedicated takes longer to obtain and is considerably harder to lose.
For card acquiring your contract, onboarding and underwriting sit with VIP360, while authorisation, clearing and settlement run on the rails of sponsoring acquirers and the card networks. VIP360 is not itself the acquirer and never claims to be. You are told which institutions are involved before you sign anything.
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