I have to hide too biggrin
The Merchant is a hooded Ganado who aids Leon during Resident Evil 4 by buying and selling weapons, upgrades and healing aids. He is infected with Las Plagas yet seems to be acting against Los Illuminados, running if Leon ever brings other Ganados near his hideouts. How he became a Ganado is not known but he may have been infected with the other villagers and the Plaga failed to take control of him (Note that he is suspiciously unharmed by the P.R.L. 412). He speaks with a distinctive Cockney accent, indicating he is not from the local area. He carries a large amount of weaponry and ammunition in his coat and in a backpack, though he will not sell the player ammunition for gameplay reasons. He is the main source of weapons in the game, instead of the player picking up weapons as he progresses (although several weapons can still be picked up in-game, and weapons available for purchase are unlocked as progress is made in the game).
The Merchant in each area can be killed although no benefit is gained from doing so. Killing a merchant in any area causes him to never appear in that location for the rest of the game. He will appear later in the game at different location on the normal difficulty, but on proffesional he stays dead, confirming that there is only one merchant.
Examining his weaponry, Leon muses that he has enough artillery to "start a small war". He also tends to says things when you do business like "Ha, ha, ha, thank you" (when you sell him something), or "Stranger! *laughs* What d'you need that for? You goin' huntin' an elephant?" (if you get The Handcannon). "Stranger... Stranger now that's a weapon" (Chicago Typewriter or Rocket Launcher). He also provides advice when buying the Mine Thrower (warning of the nature of the gun). He is usually found near a flaming blue torch (except for once, late in the game) away from other Ganados either behind buildings or inside caves, but usually keeping a low profile (to anyone who doesn't know about the blue torches anyway). The Merchant also seems to host a shooting range, which can be found in multiple areas inside the Castle, although this may prove to be non-canon, and might be instead intended for gameplay purposes only.
He may wish to keep his temporary affiliation with Leon secret, possibly as if he were a part of a secret "resistance" against Saddler and Las Plagas, as he won't speak with Leon if there is an enemy nearby. However, no enemies will harm the Merchant in any way except the dynamite-equipped Ganados,who can kill him with the "splash" of the explosion.
It is unknown if the Merchant survived the explosions on the Island. His blue torch can be seen as Leon comes down from the lift after defeating Saddler (when Ashley says "It's gonna what?!?" wink but the Merchant is not visible in the scene. It is possible the merchant escaped since he obviously had some means of transportation from the village to the castle to the island.