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A merchant account is an online bank account that receives payments for you through electronic mediums like credit cards. It's like a virtual bank account that receives electronic money.

Merchant accounts can also be payment processors, which are the gateway between your web site and the bank account into which your sales are deposited. Both services charge you a fee to handle your credit card transactions. You can get a merchant account from many banks.

Which type of company is best for a small business owner?

It depends on your business situation. Someone who runs a home-based business might be turned down from a bank since their business is less established. Merchant service providers and independent sales organizations can be more flexible. Some business owners feel comfortable dealing with their local bank; others choose a credit card processor based on their rates. Choose what is important to your business.

Some examples of companies that offer payment processing are:

• GoEmerchant - offers online merchant accounts and payment processor
• Authorize.net - the largest payment processor in the world