A merchant acquirer is a licensed bank or other financial institution that handles the processing of card payments on behalf of a merchant.
Merchant acquirers are also known as acquiring banks or merchant banks.
An acquiring bank facilitates a sales transaction, receiving the merchant’s requests for payment authorisation and directs them to the issuing bank for approval or rejection. If the issuing bank approves the payment, the merchant acquirer receives the money and transfers it to the merchant’s bank account.
The acquiring bank also processes refunds and returns for the merchant and pays the card scheme fees for using the payment networks, such as Visa, Mastercard and American Express.
|American Express||Elavon||Secure Trading FS (Online only)|
|Bank of Ireland (Evo Payments)||First Data / Fiserv||Truevo|
|Borgun||Lloyds Bank Cardnet||Wirecard|
An acquiring bank sits between the merchant and the customer’s card scheme and issuing bank, providing a secure framework to verify transactions and prevent fraud.
In the seconds after a customer taps a contactless payment card on a terminal, enters a pin number, or clicks confirm on an online order, the acquirer handles:
The merchant acquirer assumes the risk of dealing with fraud and customers charging back purchases, effectively guaranteeing the merchant’s account.
Some issuing banks provide acquiring services, but they typically charge high fees and require merchants to sign long-term contracts.
Accepting payments without an acquirer is possible if a merchant chooses a payment facilitator like Paypal, Zettle or Square, rather than taking card payments directly, as these providers interact with the issuing banks.
It’s important to understand the services a merchant acquirer offers and whether they’re compatible with your business needs.
In reality, you are unlikely to deal directly with an acquirer and will use a Merchant Service Provider (also known as MSPs, ISOs or Independent Sales Organisations) that recruit merchants on behalf of an acquiring bank and takes a % of the merchant transaction fees as payment for their sales and customer service work.
Questions to ask include:
The fees you pay will be determined by the merchant service provider you use (they will incur merchant acquirers fees which are covered the fees they charge you). They charge various fees for their services and the risks they assume – some of which are fixed costs and others are a percentage of transaction income but many will negotiate unless charging fixed fees. If they don’t provide a transparent run-down of their charges, ask them to confirm the following fees:
Many small and medium-sized enterprises (SMEs) aren’t getting the best deal from their merchant acquirer. According to a report by the Payment Systems Regulator in 2020, SMEs tend not to negotiate good terms or switch to another acquirer to save on costs which is what our company helps you to do.
That’s little surprise, as it can seem daunting to get to grips with the breadth of information out there about card processing and payment services.
Acquiring banks and issuing banks operate at different stages of the payments process. A merchant acquirer processes debit and credit card transactions on behalf of a seller, while an issuing bank issues cards to consumers and approves payments from the card accounts.
If you fill in out our short form we can help you find the best merchant acquirer for your business.
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