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What is an Acquirer?

Acquiring Banks Explained

When you process a customer’s credit card payment, the transaction moves through multiple financial institutions and systems before the payment ends up in your business bank account. It’s a complex chain of which one key component is the acquiring bank.

What is an Acquiring Bank?

Acquiring banks set merchants up with a merchant account, which is the processing arrangement between the business and their credit card processor. This agreement with the acquiring bank (or in many cases the payment processor acting on behalf of the acquiring bank) allows for the exchange of funds with the card-issuing banks and your business.

Simply put, the “acquirer” is the financial institution that works with merchants, while the issuer is the financial institution that works with customers. Acquirer’s are the banks that allow merchants to accept credit card payments. Either the acquiring bank or the payment processor then facilitate the transfer of those payments from the merchant account to the merchant’s business bank account (which is usually at an issuing bank).

The Acquirer’s Role in the Payment Processing Operation

When you process a transaction for a customer who has come into your store location or submitted an order through your online store, the transaction is processed through an acquiring bank. (Note: if you are using a payment processor, the transaction will be communicated through them first.) Acquiring banks allow merchants to accept credit card payments from cardholders and their issuing banks. When a cardholder makes a purchase, the acquiring bank works on behalf of the merchant, to confirm with the cardholder’s issuing bank that they can process the payment and that the cardholder has the funds available for the transaction.

Acquiring banks may be less visible to merchants and cardholders compared to issuing banks because they often work behind the scenes while their partners (payment processors like Helcim), are the ones who work directly with merchants during the signup process and when questions arise.

Acquiring Bank vs. Payment Processor

Instead of signing up with an acquiring bank directly, you can instead choose to sign up with a payment processor. If you sign up with a payment processor, they will communicate with the issuing banks through their acquiring bank partner and act as a mediator between your business and the cardholder issuing banks.

Some examples of acquiring banks are First Data, Bank of America, Global Payments, Elavon, and TD Canada Trust (also an issuing bank).

Some examples of payment processors include: Square, Helcim, Moneris, and Stripe.

Final Thoughts

Both issuing and acquiring banks play an important role in credit card processing. If you’d like to learn more about how credit card processing works check out the Understanding Payments section of the Helcim Blog.