The Merchant is an NPC that spawns in the tavern of your stating city. He remains for a few days, offering a quest to save a relation of his from whatever minor fraction is nearby. The quest can be declined, but it does provide an opportunity to get familiar with Pendor and provides some denars and experience.
The merchant will have different names depending on your starting city. For example, if you started at Ravenstern, he will be called "Merchant of Ravenstern."
The quest may be difficult if attempted with just the bare minimum amount of fresh recruits, due to you having to take down a leader in the kidnapper party, and up to 3 at the base.