According to merchantaccounts.cn, merchant accounts refer to the actual account that allows the transfer of money from the customers account to the merchant’s bank provided by merchant services. It may or may not include the provision of software and shop cart required to make the site interactive and ready to charge the customers credit card. Merchant service is a term that refers to the actual software that is associated with charging credit cards. It encompasses not only the merchant account but the integral software as well. Merchant Services include the retail merchant and the Internet merchant so that whether the sales are face to face or electronic the merchant is able to accept credit cards.

Merchant Services are provided for:

Retail merchant accounts
On store transactions
Internet merchant accounts
Online merchant accounts
Mail/Phone Order processing
Check Services
Seasonal merchant accounts

There are literally thousands of merchant service providers in the US. Many of these companies operate legitimate businesses that are looking to form a long-term relationship, or more appropriately a partnership with business. But, there are also a lot of businesses that are only looking to make a quick dollar and are trying to scam unsuspecting businesses out of their money. When you process a credit card, the merchant service provider, gets a very small percentage of the transaction. The remainder of the transaction goes to the card issuing bank, the card issuer and the processing bank. The processing bank is the company with all of the electronics and software that processes the credit card transaction. The processing bank is not the merchant service provider, but the merchant service provider is an authorized distributor for the processing bank. The merchant service provider gets a very small percentage of each transaction, usually less than .20%. For this reason, it is important to select a provider with a good reputation that is not going to try and scam you out of your money.
There are two types of merchant services provider that you will come in contact with. The first is the actual provider. This company will be sponsored by a FDIC insured processing bank, or several banks. The second is an independent sales representative. This is a reseller for the merchant service provider. Since the reseller gets a price from the actual provider, the reseller has to mark up the fees, so his price will be slightly higher than the provider's. The reseller is also usually unable to provide technical support and your business will be referred to the main office for support.