What Is A Merchant Acquirer?

Sometimes known as an acquiring bank, a merchant acquirer is a bank or other financial institution – such as a credit card company – which processes credit and debit card payments for businesses which accept them. If you’re a merchant it’s vitally important that you understand the role a merchant acquirer plays, and whether your business needs to work with one.   

How a merchant acquirer functions

In simple terms, a merchant acquirer is responsible for receiving the card transaction details from the terminal used by a merchant to take payments, and then passing these details on to the card issuer. Once the details have been passed on, the payment can be authorised and the transaction completed.

The merchant acquirer, in effect, acts as a kind of ‘middle-man’. They take the details of the transaction as provided by the merchant and run these details through the relevant card scheme and on to the card issuer, enabling the transaction to be processed. Once the transaction has been processed, the acquirer in question will normally credit the funds in question to a bank account nominated by the merchant when the service agreement was entered into. In addition to acting as a payment facilitator in this manner, the merchant acquirer will deal with problems or issues such as chargebacks, disputes over payments or information requested by the card issuer.

The merchant acquirer issuer

The card issuer referred to is also sometimes known as the issuing bank. It is the body responsible for issuing the card in question to the consumer using it, and does so via major payment card schemes such as Mastercard, Visa and American Express.

The role of a payments processor

A payments processor is an organisation which processes payments on behalf of a merchant. It will utilise technological solutions in order to authorise and process solutions on behalf of the issuing and acquiring bank. Although phrases such as ‘acquirer’ have come to have multiple meanings when dealing with the payment transaction process, the simplest way to look at things is to think of the acquirer as the acquiring bank which is home to a merchant’s account and which accepts deposits generated by the transactions which the merchant carries out. The fact that acquiring banks of this kind are responsible for the card transactions taken by the merchant they work with means that they have to work in line with strict regulations set out by the card issuing networks, and also carry out ongoing due diligence on the merchants they work with.     

As even this fairly brief explanation makes clear, the topic of merchant acquirers and transaction processing can quickly become extremely complex, but is one which any merchant wishing to handle card-based transactions will have to deal with.

The good news for merchants keen to take full advantage of the popularity and flexibility of on and off-line card payments is that a partnership with GoCardless takes this complex process and renders it quick, simple and easy to deal with. You can request payments from your customers directly through the GoCardless dashboard, or use one of our over 200 partner integrations, including with Xero, QuickBooks, and Sage50. We’ll take care of all aspects of your payment processing, leaving you free to concentrate on keeping your customers happy.

We can help

If you’re interested in finding out more about merchant acquirers and whether you should use one, then get in touch with our financial experts. Discover how GoCardless can help you with ad hoc payments or recurring payments