Differnce between a Merchant account, payment processor?

Yes, I think so.

A "merchant account" is a facility which allows you to take credit-card payments yourself and have your customers' payments paid right into your bank account from Visa or MasterCard.

A credit-card processing service is one which extends to you the use of their merchant account for you to be able to take credit-card payments, though not directly yourself: your customers are actually paying the credit-card processor and they're then paying the money on to you (in exchange for a fee which they charge you for the use of their merchant account facility for your transactions).

PayPal is a payment processor. (For both credit-card and direct-from-the-bank/debit-card transactions).

If you're collecting money online from customers, then somewhere in the process a merchant account is involved in the transaction. If you don't have one, then you're using someone else's, by arrangement.

For businesses with a high enough transaction-volume, it's typically more economical to have your own merchant account (and "cut out the middle man"), but there are some risks attached to this, and it's easier to get one from your own bank, where they've known and trusted you for a long time and have a reasonably favourable view of your creditworthiness (to cover you for "accidents"). There are other ways of getting your own merchant account, too, but again, they're more expensive. The great majority of "small marketers" tend to use payment processors (i.e. someone else's merchant account), which are (a) convenient, and (b) often much easier to get approval for.

There's a great article on the subject that say it best, hope it helps:

The Difference Between Merchant Accounts, Payment Gateways and Third Party Processors / GSPAY