Merchants are NPCs that sell armor and pets. They also are seen in all of the areas in the game.
They appear as small dwarves with a yellow beard, and also appear to be carrying a backpack with their goods. They also wear a blue hat. They like fireflies in the firefly forest, and gems in shiverchill mountains.
In Lamplight Town and the Arena, there are Merchant-looking people, however they give bounty hunts, let you spin the wheel of wonder, and battle in the arena.