A merchant is defined as any entity that accepts payment cards from any of the five founding members of the PCI Security Standards Council (American Express, Discover, JCB, MasterCard or Visa) as payment for goods and/or services.
A service provider, on the other hand, is a business entity that is not a payment brand and is directly involved in the processing, storage, or transmission of cardholder data. If an organisation provides a service that involves only the provision of public network access, such as a telecommunications company providing a communication link, the organisation is not considered a service provider.
Note: Where a merchant stores, processes or transmits cardholder data on behalf of other merchants or services providers, it can also be a service provider.