Acquirer (also known as an acquiring bank or merchant bank). A financial institution and a member of a card association licensed with credit card companies. Best known card associations are Visa, MasterCard, American Express, JCB, Diners Club, China UnionPay.
Acquirer is a bank that accepts or acquires performed transactions with a use of credit and debit cards issued by all banks within the card association scheme.
The acquiring bank is linked to a merchant with a line of credit, not by a bank account. This arrangement is informally known as merchant account. Acquirer serves as a connection between the merchant, card association and the issuing (cardholder) bank. Merchant account can be set up directly with an acquiring bank or through a payment gateway (PSP). Acquirer accepts the risk of a merchant’s business, provides merchant account to accept payments and manages all transactions within the scope of this account. It’s responsible for clearing transactions and depositing the funds into a merchant’s bank account.
Acquirer charges for its services. These fees vary depending on e.g. the country or merchant’s business – set up, monthly fee, chargeback fee, commission and sometimes additional fixed fee per transaction or SWIFT fee.
Acquiring bank shoulders great risk – that’s why it retains high interest regarding the nature of merchant’s business and practices. It keeps an eye on the merchant maintaining positive transactions and avoiding chargebacks. Having a clear record is crucial due to not getting paid for frauds, illegal transactions stemming from scams or identity theft.