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February 22, 2023
by David Goodale

The Difference Between a Business Account and a Merchant Account

(Slightly edited from video transcript for greater readability)

Hello, David here at Today I'm going to talk about the difference between a business account and a merchant account. This is an easy one. Stay tuned. We'll dig in in one second.

merchant account vs business account

Business Account

A business bank account is just a traditional bank account for a business. There's nothing complicated about it. That's where you would deposit your checks. If you're doing wires, it's where you'd send your wires from. It's the general commercial activity bank account that your business would use. In Canada, that would be from TD or RBC or any traditional bank really, or a credit union for that matter.

Merchant Account

A merchant account is very much like a bank account, it also holds money, but specifically, it holds the money that's captured when a business processes credit card sales. Every time a business takes a credit card and processes it the money has to go somewhere. It gets taken from the customer's credit card and gets deposited into the merchant account.

The merchant account is where the funds are held and then they're transferred to their regular business account. The merchant account is just an extra step. It's a little hop in the middle between the customer's card issuing bank and your bank account the business. But the money goes to the merchant account in the middle because it's connected to the Visa, and Mastercard networks, and that's how the funds flow.


I can stop there. This doesn't need to be any longer than that. If you do have any questions about getting a merchant account or credit card processing for your business, reach out to us at rates page. Thanks for watching. Bye now.

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David Goodale About the Author

My name is David Goodale, CEO at Merchant I launched our business in 2001 and have over 20 years of expertise in the field of online payments. If you have a payments related question or project, and especially if it relates to multi-currency or international e-commerce don't hesitate to contact me. I'm always happy to help with an honest opinion, and enjoy chatting with folks from interesting businesses.

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