What's the difference between Checking Account and Merchant Account?

I am using YNAB to create a budget for my business.

So I have a corporate bank account and I am not sure whether to use checking or merchant account type.


THank you

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  • I would assume that when YNAB refers to a merchant account, they are referring to the common definition: "A merchant account is a type of business bank account that allows a business to accept and process electronic payment card transactions."

    I believe a merchant account is more focused on accepting and processing credit card transactions (it's an account where money really only enters), whereas a checking account is more about storing money and making payments from the account (money both enters and exits). Based on this, I would think you'd want to pick the checking account type.

    Honestly, it doesn't really matter which you choose though -- YNAB treats both the same way. Really, the things to make sure are:

    -- Should the money in the account be part of the budget (on budget) or off budget (tracking account, so you can record transactions but they are primarily for tracking progress). Sounds like yours should likely be on budget. https://docs.youneedabudget.com/article/177-account-types

    -- Is it a credit card? (since that has slightly different functionality). Sounds like yours is not.

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  • Hi kimsia !

    Ben is absolutely right! A Merchant account is treated the same as a Checking account - intended to handle cash transactions. If that business account is like a checking account (can be overdrawn, handles cash and isn't a line of credit) but for your business, then selecting the Merchant account will work. :)

  • Thanks Ben Faness

    In that case, I will pick checking account.

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