For any UK business accepting card payments, understanding what a merchant account is — and how it fits into the payment process — is essential. Whether you operate online, in-store, or across multiple channels, it plays a central role in securely handling funds between the customer and your business bank account.
This guide breaks down how they work, why businesses need them, the different types available, and how Gorilla Pay supports small and medium-sized businesses across the UK.
What Is a Merchant Account?
A merchant account is a specialised business account that temporarily holds customer payments after a debit or credit card transaction has been authorised. It acts as a secure staging area where funds are checked, verified and processed before being transferred into your standard business bank account.
It is not a traditional bank account you can access directly. Instead, it is used exclusively for handling the flow of transaction funds during payment processing.
How a Merchant Account Works Step-by-Step
To understand its role in the payment chain, here’s how a typical card transaction flows:
1. Customer Makes a Payment
A customer pays using a card machine, online checkout, payment link or digital wallet.
2. Payment Details Are Sent for Authorisation
The payment gateway (if online) or terminal encrypts and securely transfers the details to the acquiring bank.
3. Funds Are Placed into the Merchant Account
Once the payment is approved, the funds are reserved and held in your merchant account.
4. Settlement into Your Business Bank Account
After the settlement period — often the next working day — the funds are released into your business bank account.
This process happens quickly and seamlessly behind the scenes, supporting smooth, secure card payment processing.
Why UK Businesses Need a Merchant Account
Accepting Card Payments in Any Channel
Whether online, via Chip & PIN, or across multiple locations, a merchant account enables card acceptance through an acquiring bank.
Protection Against Chargebacks and Fraud
Funds are reviewed and verified, helping protect businesses against fraudulent transactions.
Faster and More Reliable Settlements
Most providers offer next-day settlement, improving cash flow for small businesses.
Supports Multiple Payment Methods
A merchant account works alongside payment gateways, card terminals, and integrated payment systems.
For businesses looking to scale or operate professionally, a merchant account is a foundational requirement.
Types of Merchant Accounts
Different business models require different merchant account setups. The most common include:
Retail
Used by physical shops, salons, cafés and hospitality venues. These support countertop and portable card terminals.
Ecommerce
Designed for online businesses, supporting online card payments, hosted payment pages, and virtual terminals.
Mail Order and Telephone Order (MOTO)
For businesses taking card payments by phone, often used by service providers and trade businesses.
High-Risk
For industries with higher chargeback risk or complex operating models.
What to Consider When Choosing a Merchant Account Provider
When selecting a merchant account provider UK business owners should consider:
Contract Length and Flexibility
Avoid long tie-ins or restrictive agreements that are costly to exit.
Merchant Fees and Charges
Check transaction fees, settlement fees, monthly charges, and PCI compliance fees.
Settlement Times
Next-day settlement is essential for good cash flow.
Integration with Payment Systems
Ensure your merchant account works with your terminals, gateway, EPOS or ecommerce platform.
UK-Based Support
Reliable support reduces downtime and ensures payment continuity.
Gorilla Pay provides simplified, transparent merchant account services tailored to small and growing UK businesses. Learn more on our Services page:
https://gorillapay.co.uk/services/
Merchant Account vs Business Bank Account
A common misunderstanding is confusing a merchant account with a standard business bank account.
Merchant Account
- Holds card payments temporarily
- Used only for processed transactions
- Managed through an acquiring bank
- No direct access by the business
Business Bank Account
- Receives the settled funds
- Used for everyday business activity
- Managed like any other bank account
Both are required for accepting card payments in a professional and compliant manner.
A merchant account is a crucial part of the card payment infrastructure for UK businesses. It works alongside payment gateways and card terminals to securely process transactions, manage settlement, and protect businesses from fraud.
Whether you operate online, over the phone or face to face, a reliable account ensures payments are processed quickly and securely. Gorilla Pay offers supportive, transparent merchant services designed for small businesses that need flexibility, clear pricing and dependable UK support.
To learn more or speak with the team:
Phone: 02392 253322
Email: gorillas@gorillapay.co.uk
Visit: https://gorillapay.co.uk/services/
FAQs
Q1: Do I need one to accept card payments?
A1: Yes. It is required to hold funds after authorisation before they are settled into your business bank account. It is essential for both online and in-person card transactions.
Q2: How long do settlements take?
A2: Most UK providers offer next-day settlement, although some may take longer depending on your business type and transaction volume.
Q3: Can I get one without long-term contracts?
A3: Yes. Many modern providers, including Gorilla Pay, offer flexible, transparent merchant services without lengthy tie-ins or hidden fees.