How long does it take to get a merchant account?

If you use a PSP like Square or SumUp, you can be ready to take payments within minutes of sign-up. A dedicated merchant account from a traditional acquirer typically takes 5–10 business days for approval, with additional time for hardware delivery.

Can a sole trader get a merchant account?

Yes. PSPs accept sole traders with no minimum turnover requirement. Traditional acquirers may require a business bank account and trading history. If you are a sole trader starting out, Square, SumUp, or Tide Card Reader are your fastest routes to accepting card payments.

What is interchange-plus pricing?

Interchange-plus (or cost-plus) pricing splits the rate into the card network interchange fee (set by Visa/Mastercard) plus the acquirer’s margin. It is more transparent than flat-rate pricing and usually cheaper at volume. If you process above £200,000 a year in card sales, you may find interchange-plus cuts your total rate compared to a flat-rate PSP. Traditional acquirers may offer interchange-plus at higher volumes.

What is a payment gateway?

A payment gateway is the software that connects your online checkout to the card network. For in-person payments, the card reader is the gateway. For online payments, providers like Square, Stripe, and GoCardless provide a gateway as part of their service. A merchant account is the account that holds funds; the gateway is the technology that routes the transaction. We cover the main gateway options in our best payment gateway guide.

What Is a Merchant Account? A Plain-English Guide for UK Businesses

A merchant account is a type of bank account that allows a business to accept card payments. When a customer pays by card, the funds are held temporarily in the merchant account before being transferred to your business bank account.

Most small UK businesses never see this layer directly. Payment service providers like Square and SumUp manage it on your behalf.

BusinessExpert may earn a commission if you sign up through links on this page. Square and SumUp are affiliate partners. Our editorial recommendations are based on verified pricing and features, not commission rates.

What is a merchant account and how does it work?

The payment flow for a card transaction has several steps: the customer’s card is read, the card network (Visa or Mastercard) checks the available funds, the transaction is authorised, and the funds are reserved in the merchant account.

Settlement typically happens 1–2 working days later, once the funds transfer from the merchant account to your bank.

Traditionally, a merchant account required a separate application to an acquiring bank (Worldpay, Barclays, NatWest). The acquirer underwrites your business, approves the account, and charges a monthly fee plus a per-transaction rate. This process can take weeks.

Merchant account vs payment service provider: what is the difference?

A payment service provider (PSP) like Square, SumUp, or Stripe pools thousands of merchants into a single acquiring relationship. You do not need your own merchant account, the PSP gives you access to its. In exchange:

Sign-up is instant, often under five minutes
No underwriting or credit checks in most cases
Flat transaction rates (no interchange-plus complexity)
The PSP can suspend or terminate your account if you breach their terms

A dedicated merchant account from an acquirer gives you more control, potentially lower rates at volume, and a direct commercial relationship. The trade-off is a longer setup process and a contractual commitment.

Get started with Square

Do I need a merchant account?

Not a dedicated one. For most small UK businesses, sole traders, limited companies, hospitality, retail, professional services, a PSP handles everything a merchant account does without the setup friction. The question is really which PSP fits your volume and business type.

A dedicated merchant account is worth considering if you process £200,000+ per year in card sales, operate in a sector that PSPs flag as high-risk, or need contractual rate guarantees over 12–36 months.

Merchant account providers

Square Reader

Top Pick

Best for: Small businesses wanting a free POS app and no monthly fees

Watch out: 1.75% flat becomes expensive above ~£6,000/month: no volume discount exists

Not ideal if: High-volume sellers who would benefit from Dojo or other negotiated per-transaction rates

Eligibility: UK businesses: sole traders, partnerships, and limited companies. Account holders must be 18 or over. Custom rates available for businesses processing over £200,000 annually. Prohibited categories include firearms and other restricted activities: see Square’s Acceptable Use Policy.

Not ideal if: High-volume sellers who would benefit from Dojo or other negotiated per-transaction rates

Watch out: 1.75% flat becomes expensive above ~£6,000/month: no volume discount exists

No monthly fee and no contract: zero downside risk while testing card acceptance

Free POS app usable from day one: most owners taking payments within an hour

Amex accepted at the same 1.75% rate: no surcharge or separate policy needed

Software ecosystem (online store, invoices, appointments) on the same account, no extra fees

1.75% flat becomes expensive above roughly £6,000/month in card takings

Settlement is 1–2 working days unless you pay extra for instant transfer

Bluetooth-to-phone means a flat battery or dropped app stops checkout

SumUp Solo Lite

Best for Startups

Best for: Sole traders and startups wanting the lowest hardware entry cost

Watch out: Solo Lite has no connection of its own. It pairs to your phone over Bluetooth and depends on that phone’s battery and signal.

Not ideal if: Businesses taking a meaningful share of American Express, corporate or international cards, which stay at 1.69% on both plans

£25 ex VAT hardware is one of the lowest entry points on the market, owned outright

In-person payments made with a SumUp card cost 0.00% on both plans

Payments Plus at 0.99% is a credible upgrade path once most takings are UK debit and credit cards

Amex accepted in person at the standard 1.69% rate, with no separate premium-card policy

No connectivity of its own; it depends on a paired phone’s battery and signal

The 0.99% Payments Plus rate does not apply to Amex, premium or international cards

Break-even on Payments Plus depends on card mix, so the plan is wrong for many small users

Online and payment-link transactions cost 2.5%, well above the in-person rate

SumUp Solo Lite reader at £25 ex VAT (formerly branded SumUp Air), pairs with the free SumUp app on iOS and Android

Free SumUp app with sales reports, item library, invoicing and payment links, with no subscription

Payouts by 7am the next day to a SumUp Business Account including weekends, or 1 to 2 business days to an external bank

Payments Plus at £19/month drops UK debit and credit cards accepted in person to 0.99%

Accepts major debit and credit cards including Amex in person at the standard rate; online and payment-link transactions cost 2.5%

Stripe Terminal

Best for: Tech-forward businesses that already use Stripe online and want a unified payment stack

Eligibility:

UK-registered businesses: sole trader, Ltd, LLP, charity, or partnership
UK bank account in the business name required for payouts
No minimum trading history or revenue threshold for standard accounts
High-volume merchants moved to Stripe Custom with bespoke underwriting
Restricted categories: adult content, regulated gambling, firearms, MLM, unregulated CBD, and any business on the FCA restricted activities list
Stripe Capital and Stripe Issuing are invitation-only based on processing history (typically 3+ months at £10k+/month)
KYC/KYB via Companies House cross-check; 1-3 business days from sign-up to first live transaction in most cases

1.4% + 10p for EEA card-present transactions, competitive without a monthly commitment

Unified dashboard: online and in-person payments in one place with consolidated reporting

Stripe Radar fraud detection included, no extra fee

No monthly fee and no contract, suits variable or seasonal transaction volumes

Tap to Pay on iPhone and Android eliminates the need for dedicated hardware

Custom Terminal integration requires SDK development, not a no-code out-of-box setup

2.9% + 10p for non-EEA cards, expensive for businesses with international customers

Standard settlement takes 3 business days; instant payout costs 1% (minimum 40p)

New accounts face a 7-day holding period before first payout

Account holds can freeze both online and in-person payment channels simultaneously

Merchant account fees explained

Merchant account and PSP costs typically include some or all of the following:

Transaction rate: a percentage of each card payment, usually 0.79%–1.75% for in-person payments in the UK on published plans.
Monthly fee: £0 on most PSP free plans; £12.99–£39.99 on plan tiers; £15–£30 on traditional acquiring contracts.
Hardware: £25 for a SumUp Solo Lite up to £149 for a Square Terminal. Traditional acquirers rent terminals; PSPs sell them outright.
Authorisation fees: some acquirers charge £0.04–£0.05 per attempted transaction. PSPs like Square and SumUp do not on published PAYG plans.
Refund fees: some acquirers charge per refund. PSPs vary, check the terms.

Which merchant account or PSP is right for my business?

For a business taking its first card payment, the fastest and most cost-effective route is a PSP:

Under £2,000/month: SumUp Solo Lite at 1.69% PAYG, £25 reader, no monthly fee.
£2,000–£5,000/month: SumUp Payments Plus at 0.99% (£19/month) or Tide Card Reader at 0.79% + 3p (£12.99/month).
Above £5,000/month: Tide Sell In-Person plan or a custom quote from Dojo, TakePayments, or Worldpay.

Get started with SumUp

Frequently asked questions

How long does it take to get a merchant account?
If you use a PSP like Square or SumUp, you can be ready to take payments within minutes of sign-up. A dedicated merchant account from a traditional acquirer typically takes 5–10 business days for approval, with additional time for hardware delivery.
Can a sole trader get a merchant account?
Yes. PSPs accept sole traders with no minimum turnover requirement. Traditional acquirers may require a business bank account and trading history. If you are a sole trader starting out, Square, SumUp, or Tide Card Reader are your fastest routes to accepting card payments.
What is interchange-plus pricing?
Interchange-plus (or cost-plus) pricing splits the rate into the card network interchange fee (set by Visa/Mastercard) plus the acquirer’s margin. It is more transparent than flat-rate pricing and usually cheaper at volume. If you process above £200,000 a year in card sales, you may find interchange-plus cuts your total rate compared to a flat-rate PSP. Traditional acquirers may offer interchange-plus at higher volumes.
What is a payment gateway?
A payment gateway is the software that connects your online checkout to the card network. For in-person payments, the card reader is the gateway. For online payments, providers like Square, Stripe, and GoCardless provide a gateway as part of their service. A merchant account is the account that holds funds; the gateway is the technology that routes the transaction. We cover the main gateway options in our best payment gateway guide.

How we reviewed this

What we covered. We explain what a merchant account actually is, how money moves from a customer’s card to your bank, and where the fees get taken out, using acquirer and PSP documentation alongside FCA guidance current in May 2026.

Data sources. We traced the real fee structures and settlement terms straight from provider and acquirer pricing pages in May 2026, and we confirmed regulatory status against the FCA register.

Update cadence. We re-verify this page at least monthly, and whenever a provider changes pricing, eligibility, or terms. The verification date on the page reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.