What is a Merchant Acquirer?

Aine Hendron
26 Apr 2024

A merchant acquirer is a bank that processes payments on behalf of a merchant, or business. It’s easier to understand when we break down where the name comes from. 

In payment terms, the merchant is the seller. The merchant is the business, or person, that sells goods or services to paying customers. Merchants are also known as retailers. 

The ‘acquirer’ refers to the merchant’s bank account, rather than the merchant themselves. A merchant acquirer is the name for the financial institution or bank that processes payments sent by a customer to a business. They’re sometimes also known as an acquiring bank. They’re known as the acquirer since that’s where the money is received on behalf of the merchant when a customer pays. 

What does a merchant acquirer do?

Merchant acquirers collect card payments that have been accepted by retailers. They’re part of the payment process that ensures that customers can pay safely and merchants receive their payments into their accounts. In the payment cycle, the merchant acquirer deals with some of the following:

  • Verifying the validity of the card and cardholder
  • Protecting the cardholder’s data
  • Accepting the payment from the card-issuing bank
  • Transferring the funds to the merchant
  • Processing all payment fees charged by credit/debit card companies on behalf of the merchant
  • Facilitating refunds, chargebacks, and returns
  • Providing payment terminals to merchants
  • Supporting online payment portals (payment gateways) for merchants

Facilitating payments

The main role of the merchant acquirer is to support the merchant and help them process transactions. So while they mostly deal with the digital aspect of the payment, they will also deal with the hardware side of things.

Some, but not all, merchant acquirers will give the merchant a card terminal. These are PCI DSS verified machines. The PCI DSS (Payment Card Industry Data Security Standard) is a security standard developed and maintained by the PCI Council. Its purpose is to help secure and protect the entire payment card ecosystem [1].

Some merchant acquirers even support the purchasing or leasing of some POS (point of sale) terminals to help merchants accept payments. These tills will also be PCI DSS approved to ensure robust security and protection for both the merchant and the customer. 

If the retailer is online, the merchant acquirer will establish an internet payment gateway where customers can pay safely and securely online. 

Dual merchant and customer protection

Dealing with sensitive financial information carries significant risk. Merchant acquirers have steps in place to prevent fraud and chargebacks from happening to the merchant.

Under most credit/debit card policies, merchants may be liable if a chargeback occurs. This is when the payment which was supposed to be sent to the merchant’s bank account, is returned to the customer’s bank account. 

The merchant acquirer will review and check the transaction details and cardholder claims to protect the merchant from fees and chargeback. You might have experienced this as a customer if your contactless payment is declined, and you’re prompted to use chip and pin instead. In this case, either your bank or the acquiring bank might have declined the transaction for security reasons and to prevent chargebacks.

Merchant acquirers, while they technically work to facilitate transactions for the merchant, have very strict measures in place to prevent illegal financial activity. This means they will regularly conduct checks to make sure that the merchant isn’t involved in money laundering or fraudulent activity. This is to protect customers and other businesses.

The basics of payment processing

The payment flow, or payment process, involves four companies working together to facilitate the transaction. A typical, approved payment will follow this journey:

  1. Customer inserts or taps their credit or debit card at the payment terminal.
  2. The terminal encrypts the card details and sends them to the merchant acquirer.
  3. The merchant acquirer sends a notification to the credit card association named on the customer’s card (such as Amex, Visa, MasterCard).
  4. The credit card association approves the payment and requests the issuing bank (the customer’s bank) to authorise the payment.
  5. The issuing bank approves the transaction and notifies the credit card association. 
  6. The credit card association notifies the acquiring bank of the authorisation. 
  7. The issuing bank places a hold on the cardholder’s account, which will then turn into a withdrawal after the transaction clears. 
  8. The card terminal or point of sale system prints a receipt to confirm the transaction.
  9. Funds reach the merchant’s accounts after a few hours, or days. 

Do I need to contact a merchant acquirer to accept payments?

Merchant acquirers are necessary for every card transaction you’ll accept for your business. If you process payments yourself, you’ll need a merchant acquirer. This way, you’ll pay a fee with each transaction to use their services, and use the designated software that they provide.

However, you don’t always have to speak with them directly. If you accept payments via a card reader and point of sale, the company you access those services with will handle the merchant acquirer on your behalf. The added benefit of this is that you choose your own software and hardware, and your POS provider will help with payment inquiries on your behalf.

Epos Now allows merchants to choose the solution that suits their business needs best. 

As a leader in retail and hospitality technology, we know that businesses need flexibility and freedom to thrive and serve their customers.

Epos Now Payments takes measures to provide the best services in three cornerstones of payment processing: pricing, payments, and hardware. 


  • Most card companies charge various rates for each transaction. Epos Now allows merchants to pay one blended rate for all card types. 
  • Merchants pay one consistent, flat monthly fee for merchant services.


  • Epos Now payment terminals facilitate chip-and-pin, swipe, and contactless options.
  • Take major UK and international cards, and emerging services like AliPay and WeChat Pay.
  • eWallets like Samsung Pay, Google Pay and Apple Pay are supported.


  • PCI DSS compliant hardware for robust security.
  • Countertop, handheld, and portable terminals are available.
  • Directly integrated with your Epos Now till for simplified reporting.

Simplify business management with a reliable POS system

Financial management is a huge part of running a business, but it doesn’t have to be stressful and time-consuming. By choosing the right financial software for your small business. Let your point of sale handle things like reviewing sales, bookkeeping, and accounting tasks, while you turn your attention to other areas of your business. 

With Epos Now, you can also:

  • Review profitability reports based on individual product performance, trending items, best and worst sellers, and employee sales
  • View sales analyses on profit margin, cash flow, and other expenses
  • Access multi-award-winning inventory management systems that sync online sales and in-person sales for the most up-to-date stock levels
  • Automate stock purchasing so you never miss a sales opportunity
  • Save customer contact details and shopping preferences for more targeted marketing on our CRM system
  • Integrate with the business automation apps that are right for your business
  • Create and send invoices using simple templates and a built-in VAT calculator
  • Receive and pay ongoing invoices automatically
  • Simplify employee management for more efficient scheduling and payroll

Request a free call back from one of our experts today.