Merchant accounts for online shops: whether you need one, and what changes if you get one
Where card payments land before they're paid out to your bank. Most Shopify shops never open one of their own, and that's usually fine.
- 081Merchant Account
- A type of bank account that allows businesses to accept payments in multiple ways, typically debit or credit cards.
- Provided by
- An acquirer: the bank or firm that processes card payments for sellers
- Most shops use instead
- Shopify Payments, Stripe or PayPal, which sign you up under their own arrangement
- Comes with
- Underwriting, identity checks and a contract before your first payment
- Not the same as
- A payment gateway, which carries card details from your checkout to the processor
Why most Shopify shops never open a merchant account of their own
We get it, payments are the dullest bit of launching a shop. The good news is that Shopify Payments, Stripe and PayPal hold the relationship with the banks themselves, and sign you up underneath it. So you can take cards without a bank underwriting your business first.
Your own merchant account comes up later. Usually it's when volume gets big enough that a negotiated rate starts to matter, or when you need something your current provider doesn't offer. It's a finance decision, and none of this is financial advice.
What changes when you move to your own merchant account
| Question | Shopify Payments, Stripe or PayPal | Your own merchant account |
|---|---|---|
| Getting started | Online, with identity checks as you go | Underwriting and paperwork before you go live |
| Pricing | Published standard rates | Negotiated, usually once your volume justifies it |
| Shopify's own fee | None with Shopify Payments | An extra transaction fee on every order, set by your plan |
| Disputes and holds | In the provider's dashboard | With the acquirer, under your contract |
Do the sums with Shopify's extra fee in them. It's the line people forget when a lower headline rate looks like a saving.
Where card payments meet your customer emails
Payments feel like a finance problem until they turn into a customer one. They cross in three places.
- Disputes: a charge somebody doesn't recognise is an easy one to dispute, so make the name on their bank statement match the name on your emails, and send a clear order and shipping confirmation
- Holds: providers can hold back payouts when volume jumps or disputes rise, so warn them before a big launch or Black Friday, not after
- Failed renewals: if you sell subscriptions, an expired card is churn nobody chose, and the email asking for new card details deserves as much care as any campaign
That last one has its own write-up on reducing subscription churn. And when a provider asks you for documents, that's KYC, not a fault on your account.
Related terms
FAQs
Do I need a merchant account to sell on Shopify?
No. Shopify Payments, or a provider like PayPal, lets you take cards under its own arrangement with the banks. You'll still go through identity checks, and you'll still sign the provider's terms. A merchant account of your own is an option for later, not something you need at launch.
What's the difference between a payment gateway and a merchant account?
The gateway is the plumbing: it carries card details securely from your checkout to the processor. The merchant account is where the money settles before it's paid out to your business bank account. Shopify Payments handles both for you, which is why most founders never have to learn the difference.
Why has my payment provider held back my payouts?
Usually because something changed. A spike in volume, a rise in disputes, a change in what you sell or details that need verifying again can all trigger a hold. The provider will say what it needs in your dashboard. Answer it there, never through a link in an email, and warn them before your next big launch.
Rather we explained it on your own account?
Bring your Klaviyo account to a growth consultation. We'll walk through what this means for your numbers, in plain English, and what we'd fix first.
Half an hour with Theo, our founder.
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