Who is an Acquirer?

A merchant or a retailer store cannot just accept cash. They have to accept credit cards and debit cards to get your business. In order for them to get paid for a credit card transaction, they have to first authorize your transaction with the corresponding Issuer bank every time you swipe. But there are just thousands of such Issuer banks. You may be holding a credit card from any one of the thousands of banks. If every merchant had to establish a direct link and relationship with every other Issuer bank in the country, the system would have fallen apart long time ago.

An Acquirer is the entity that helps a Merchant to accept credit card and debit card payments. They are sometimes referred to as the Merchant Acquirer or the Acquiring Bank as well.

In this setup, a merchant establishes connectivity and relationship only with their Acquirer and nobody else. The Acquirer will in-turn maintain their own link to every other bank. To be accurate, the Acquirer doesn’t maintain a link with every other bank either; instead they connect only to the major payment networks like Visa, MasterCard, American Express, Discover and so on. The payment networks in-turn maintain a link with all their respective Issuers.

Acquirers do a lot more than just assist in authorizing transactions. They help with clearing and settlement. They manage chargebacks, refunds and disputes. They own the responsibility if a merchant goes belly-up. This list goes on, but you get the idea. Bank of America, Chase Paymentech and Wells Fargo are examples of Acquirers.

Often times an Acquirer outsources their work to external entities called Acquirer Processors. They process transactions on behalf of the acquirers by connecting merchant transactions to payment networks. They also provide the POS device, securely route transactions from the POS to the payment network, manage authorization, clearing and settlement. They may also have tie-ups with sub-processors, ISOs and other partners to get the job done. First Data, Elavon and TSYS are examples of Acquirer Processors.