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Home / Glossary

Merchant account: Meaning, Types, Creation & Processing

16 Jun, 2022
Written by
Elizaveta Latinskaya
Elizaveta Latinskaya

A merchant account is an individual trading account that allows a merchant to accept payments from various credit cards around the clock, regardless of the acquiring bank’s business hours.

It is difficult to overstate this account type’s significance for the gambling industry. Not all conventional payment systems are prepared to partner with online casinos due to the increased risk of running into a scam. To safeguard themselves, banks may refuse such risky cooperation. In addition, even if they agree to work with a casino, data verification is likely to take several days.

To avoid this sort of problem, one should register a merchant account. There are several advantages to doing so:

  • Standardized and secure transaction processing that helps prevent fraud;
  • The option to offshore credit card processing provided to casino merchant accounts, which helps expand business geography;
  • Secure and encrypted SSL servers for added security;
  • Access to view reports on all types of transactions;
  • Multi-currency transactions and electronic money processing;
  • Fast customer service;
  • The option for offshore casinos to accept credit/debit cards of all types (Visa and Mastercard).

As you can see, merchant accounts help solve numerous problems faced by the gambling business, which is why many online casinos opt to use this service. It is worth noting that, before they can get a merchant account, one has to meet a set of specific requirements.

A legal entity can only obtain a merchant account for a casino. In addition, your website must contain the following information:

  • Payment return procedure, amounts, and terms;
  • General company provisions, its rules and user interaction conditions;
  • Phone number, head office address, and customer support website.

Requirements may vary depending on the bank and jurisdiction where the application is made. You will also need to provide the following documents:

  • Legal entity registration certificate and a package of constituent documents;
  • The company’s business plan or development strategy;
  • Bank statement confirming account status, no older than two weeks;
  • Shareholders’ or directors’ passport copies, as well as communication channels for counterparties to confirm the right to own a business;
  • Beneficiary summary and documents confirming casino website ownership;
  • A license to conduct gambling activities.

If everything is done correctly, then getting a merchant account will be easy, but one must prepare their documents with utmost care.

What taxes does the gambling industry have to pay in different countries?

Every country has developed its own rules for regulating gambling. Some ban such activities outright, while others subject the industry to varied levels of taxation. For the purposes of this article, let us consider the example of three different countries: the USA, Germany, and Russia.

What taxes does the gambling industry have to pay in different countries

Taxation in the USA

Previously, the United States had imposed a ban on gambling throughout the country, except for a few select states. In 2018, however, the restriction was lifted, and the local casinos have opened their doors once again, as long as they adhered to certain conditions.

The United States does not have a flat gambling tax rate and instead grants every state the right to define its own rules, but there is a federal tax on winnings that goes up to 35%. In addition to this tariff, the states also charge additional fees. In New Jersey, for example, the local tax is almost 11%, and is applied to all winnings, including lotteries.

Foreigners must pay 30% of their winnings to the treasury.

In the state of Nevada, where the famous city of Las Vegas is located, there are 3 types of gambling licenses:

  • One for slot machines;
  • One to open your own gambling hall;
  • And one for gaming tables and slot machines.

The casinos themselves and their employees, such as managers, croupiers, and dealers, are all subject to licensing.

Taxation levels depend on the choice of license. So, if the institution has 10 slot machines, it will have to pay $750 quarterly for each and $6,000 annually.

In addition, the gaming business fees grow alongside the company’s income.


In Germany, casinos and sports betting companies with a physical place of registration are allowed. For a long time, however, the online side of such entertainment has not been subject to regulation. In the summer of 2021, the country passed a law on the legalization of online casinos and started issuing new licenses, which has garnered a lot of criticism from the public. The rate for online operators is significantly higher than for conventional casinos (Online casinos pay 3 times more compared to their physical counterparts and 15 times more than a typical slot machine hall).

This is done so that people are more willing to go to classic casinos instead of playing in online clubs that are harder to regulate.


In Russia, gambling and sports betting can only be done in specially designated areas. There is a set rate for casinos, including income tax, VAT, and local taxes.

Tax amount depends on which games are installed and whether the institution accepts sports bets. So, for example, the owner of an installed slot machine will need to pay between ₽3,000 and ₽15,000.

In regions with no applicable local legislation, the rates are set at the lower bar of the established range. In addition, players must pay a 13% tax on all winnings.

As you can see, the difference in taxation between various countries is quite extensive, so one needs to carefully study the local legal framework before starting a new business.

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