Merchant account

Imagine that you have a lemonade stand and you want to sell cups of lemonade to people passing by on the street. You need a way to collect their money when they buy a cup. That's where a merchant account comes in.

A merchant account is like a special bank account for businesses that lets them accept credit card payments from customers. You give your lemonade stand's bank account information to a payment processor, which is like a middleman that helps process and authorize the credit card payments.

When a customer swipes their card to buy a cup of lemonade, the payment processor communicates with the customer's bank to make sure they have enough money to pay for it. If everything checks out, the payment processor sends the money to your merchant account. You can then transfer the money from your merchant account to your regular bank account or use it to purchase more lemons, sugar and cups.

Having a merchant account lets you sell more than just lemonade, too – you can start an online store, for example, or accept credit card payments at a farmer's market for your fresh produce. It's just like having a little bank account for your business that makes sure you get paid for what you sell.