Merchant banks are institutions that provide loans and capital for business enterprises. They may also provide consulting services, or help their clients structure large international transactions. Merchant banks provide different services from both retail and investment banks.

A merchant account is a type of business bank account that allows a business to accept and process electronic payment card transactions. Merchant accounts require a business to partner with a merchant acquiring bank who facilitates all communications in an electronic payment transaction.

In short, merchant banking involves providing highly specialized financial services to large institutional clients. This may include corporations, individuals (or families), and even governments.

Merchant banking is a professional service provided by the merchant banks to their customers considering their financial needs, for adequate consideration in the form of fee. Merchant banks are banks that conduct fundraising, financial advising and loan services to large corporations.

Merchant banks were the first modern banks and evolved from medieval merchants who traded in commodities, particularly cloth merchants. Historically, merchant banks' purpose was to facilitate and/or finance production and trade of commodities, hence the name "merchant". Few banks today restrict their activities to such a narrow scope.