Traditional vs. online merchant accounts
By definition, merchant accounts are provided by “acquiring banks”, also called “acquirers”. These are not usually your high street bank – they can be a provider specialising in different kinds of merchant services related to card acceptance.
Traditionally, merchant accounts are granted after weeks-long applications, and once opened, you’re in a long-term contract with the acquirer. You can also go to independent service providers (ISPs) like Takepayments and Paymentsense, who negotiate contract terms with acquirers on behalf of merchants. This way, you may not handle the merchant account directly, but there will still be a contract.
Nowadays, fintech companies like PayPal and myPOS provide so-called online “merchant accounts”, but these are not the same as actual merchant accounts described above. It is simply an online account through which you can access money received by payments online or through certain card readers. They use behind-the-scenes merchant accounts of their own, but you don’t enter into a contract with it.
Online accounts can receive or make transfers or payments without necessarily being connected to your day-to-day bank account. Take, for example, PayPal’s Business account. Customers can pay you through the PayPal Here card reader or online in whichever way you’re set up to receive payments. It is then up to you whether you transfer that money to a bank account, use a special debit or credit card attached to the online account, make PayPal payments of your own, or keep it online.