diff --git a/crates/diesel_models/src/errors.rs b/crates/diesel_models/src/errors.rs
index 0a8422131ae2..30e4273fdb57 100644
--- a/crates/diesel_models/src/errors.rs
+++ b/crates/diesel_models/src/errors.rs
@@ -10,7 +10,15 @@ pub enum DatabaseError {
     NoFieldsToUpdate,
     #[error("An error occurred when generating typed SQL query")]
     QueryGenerationFailed,
+    #[error("DB transaction failure")]
+    TransactionFailed(String),
     // InsertFailed,
     #[error("An unknown error occurred")]
     Others,
 }
+
+impl From<diesel::result::Error> for DatabaseError {
+    fn from(err: diesel::result::Error) -> Self {
+        Self::TransactionFailed(err.to_string())
+    }
+}
diff --git a/crates/router/src/core/admin.rs b/crates/router/src/core/admin.rs
index c0d6c576dd56..0472ffb41989 100644
--- a/crates/router/src/core/admin.rs
+++ b/crates/router/src/core/admin.rs
@@ -111,10 +111,6 @@ pub async fn create_merchant_account(
         .payment_response_hash_key
         .or(Some(generate_cryptographically_secure_random_string(64)));
 
-    db.insert_merchant_key_store(key_store.clone(), &master_key.to_vec().into())
-        .await
-        .to_duplicate_response(errors::ApiErrorResponse::DuplicateMerchantAccount)?;
-
     let parent_merchant_id = get_parent_merchant(
         db,
         req.sub_merchants_enabled,
diff --git a/crates/router/src/db/merchant_account.rs b/crates/router/src/db/merchant_account.rs
index e0bff7d9069c..5f533eabc9f6 100644
--- a/crates/router/src/db/merchant_account.rs
+++ b/crates/router/src/db/merchant_account.rs
@@ -1,3 +1,4 @@
+use async_bb8_diesel::AsyncConnection;
 use common_utils::ext_traits::AsyncExt;
 use error_stack::{IntoReport, ResultExt};
 #[cfg(feature = "accounts_cache")]
@@ -72,20 +73,36 @@ impl MerchantAccountInterface for Store {
     async fn insert_merchant(
         &self,
         merchant_account: domain::MerchantAccount,
-        merchant_key_store: &domain::MerchantKeyStore,
+        merchant_key_store: domain::MerchantKeyStore,
     ) -> CustomResult<domain::MerchantAccount, errors::StorageError> {
         let conn = connection::pg_connection_write(self).await?;
-        merchant_account
-            .construct_new()
-            .await
-            .change_context(errors::StorageError::EncryptionError)?
-            .insert(&conn)
-            .await
-            .map_err(Into::into)
-            .into_report()?
-            .convert(merchant_key_store.key.get_inner())
-            .await
-            .change_context(errors::StorageError::DecryptionError)
+
+        conn.transaction_async(|e| async move {
+            let key_store = merchant_key_store
+                .construct_new()
+                .await
+                .change_context(errors::StorageError::EncryptionError)?
+                .insert(&e)
+                .await
+                .map_err(Into::into)
+                .into_report()?
+                .convert(&self.get_master_key().to_vec().into())
+                .await
+                .change_context(errors::StorageError::DecryptionError);
+
+            merchant_account
+                .construct_new()
+                .await
+                .change_context(errors::StorageError::EncryptionError)?
+                .insert(&e)
+                .await
+                .map_err(Into::into)
+                .into_report()?
+                .convert(merchant_key_store.key.get_inner())
+                .await
+                .change_context(errors::StorageError::DecryptionError)
+        })
+        .await
     }
 
     async fn find_merchant_account_by_merchant_id(
diff --git a/crates/storage_impl/src/errors.rs b/crates/storage_impl/src/errors.rs
index bc68986cb8ea..c8abccdf4b62 100644
--- a/crates/storage_impl/src/errors.rs
+++ b/crates/storage_impl/src/errors.rs
@@ -98,6 +98,9 @@ impl Into<DataStorageError> for &StorageError {
                 storage_errors::DatabaseError::QueryGenerationFailed => {
                     DataStorageError::DatabaseError("Query generation failed".to_string())
                 }
+                storage_errors::DatabaseError::TransactionFailed(e) => {
+                    DataStorageError::DatabaseError(e.to_string())
+                }
                 storage_errors::DatabaseError::Others => {
                     DataStorageError::DatabaseError("Unknown database error".to_string())
                 }
diff --git a/crates/storage_impl/src/lib.rs b/crates/storage_impl/src/lib.rs
index dd8d71fc701e..406c6ee9ab8b 100644
--- a/crates/storage_impl/src/lib.rs
+++ b/crates/storage_impl/src/lib.rs
@@ -245,6 +245,9 @@ pub(crate) fn diesel_error_to_data_error(
         diesel_models::errors::DatabaseError::QueryGenerationFailed => {
             StorageError::DatabaseError("Query generation failed".to_string())
         }
+        store::errors::DatabaseError::TransactionFailed(e) => {
+            StorageError::DatabaseError(e.to_string())
+        }
         diesel_models::errors::DatabaseError::Others => {
             StorageError::DatabaseError("Others".to_string())
         }