What is a Merchant Acquirer? Learn About Acquiring Banks

Aine Hendron
26 Apr 2024

Did you know that subscription businesses lose 9% of revenue from failed payments? In today's digital economy, accepting card payments is essential for businesses of all sizes and finding a strategic approach is key to improving operations and revenue.

Now, Behind the scenes of every card transaction is a crucial player known as a merchant acquirer. But what exactly is a merchant acquirer, and what role do they play in the payment process?

This blog will give you the 411 into all things merchant acquirers and acquiring banks, shedding light on their functions, importance for businesses, and factors to consider when choosing the right one for your needs. Whether you're a small startup or a large enterprise, understanding merchant acquirers is key to navigating the complex world of payment processing. Let's get started.

What do payment acquirers do?

A merchant acquirer, often called an acquiring bank, is a financial institution that handles payment processing for businesses. They're the ones ensuring smooth transactions when customers pay online. Now, a bit of terminology: 'acquirer' can refer to a merchant acquirer or a corporate one. A merchant acquirer, specifically, processes credit and debit card transactions for companies. You might hear them also called acquiring banks. So, what's the deal with merchant acquirers? They handle everything related to card payments for merchants including:

  • Processing payments from start to finish.
  • Verifying customers for security.
  • Getting the nod from the card issuer.
  • Handling the money transfer from the customer's bank.
  • Taking care of all the scheme fees, like VISA or MasterCard charges.
  • And helping out with refunds, chargebacks, and returns.

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Elements to consider when choosing a banking acquirer for your business

Choosing the right banking acquirer is crucial for businesses looking to process card transactions smoothly and securely. Here are key elements to consider when selecting a banking acquirer:

  • Service offerings: Evaluate the range of services offered by the acquirer, including payment processing, fraud prevention, chargeback management, and customer support. Ensure they can meet your business's specific needs.
  • Transaction fees: Compare transaction fees, including interchange fees, processing fees, and any additional charges. Look for transparent pricing structures that align with your budget and transaction volume.
  • Security measures: Assess the acquirer's security protocols and compliance with industry standards such as PCI DSS (Payment Card Industry Data Security Standard). Verify their ability to protect sensitive payment data and prevent unauthorized access.
  • Integration compatibility: Consider the acquirer's compatibility with your existing payment systems or POS solutions. Seamless integration can streamline operations and enhance the customer payment experience.
  • Technical support: Evaluate the quality and availability of technical support provided by the acquirer. Ensure they offer responsive assistance for troubleshooting issues and resolving technical challenges promptly.
  • Industry experience: Look for an acquirer with experience in your industry or niche. They should understand the unique requirements and compliance regulations relevant to your business sector.
  • Scalability: Consider the acquirer's ability to scale with your business as it grows. Ensure they can accommodate increased POS transaction volumes and adapt to evolving payment trends and technologies.

By carefully evaluating these elements and conducting thorough research, you can make an informed decision when choosing a credit card acquirer that aligns with your business goals and ensures a seamless payment processing experience for your customers.

The acquiring bank’s role during a card payment processing cycle

Alright, let's break down how merchant acquiring banks handle card payments from start to finish:

  • Step 1. Getting merchants ready: Acquiring banks, as merchant acquirers, start by setting up a merchant account for your businesses to accept card payments. They make sure everything is good to go for processing transactions.
  • Step 2. Making the sale: When a customer buys something with a credit or debit card, the merchant sends the payment details to the acquiring bank account.
  • Step 3. Checking the card: The acquiring bank checks with the card network and the customer's bank to see if the payment can go through – you know, making sure the card is legit and has enough funds for the purchase.
  • Step 4. Getting the green light: If all looks good, the acquiring bank gets the thumbs-up to go ahead with the POS transaction.
  • Step 5. Moving the money: After approval, the acquiring bank shifts the money from the customer's bank to the merchant's account – this usually takes a couple of days.
  • Step 6. Tech team-up: Acquiring banks, along with secure payment gateways, process and transfer payment data between the merchant's system and the bank, ensuring a secure transfer.

Differences between payment issuers and merchant acquirers

Merchant acquirer vs payment issuers: You've likely heard of both terms, but let's take a closer look at what each one does so you can understand their roles in payment processing.

Payment issuers, such as banks, manage customer accounts and authorize transactions, focusing on cardholder risks and maintaining direct customer relationships. On the other hand, merchant acquirers partner with businesses, processing card payments, handling merchant accounts, and managing merchant risks.

Issuers directly authorize cardholder credit and debit card transactions, while acquirers process requests from merchants. Issuers earn revenue from cardholder fees, while acquirers earn from merchant processing fees. Understanding these distinctions helps businesses choose the right payment processors and navigate the nuances of merchant account management.

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Why do businesses need an acquiring merchant to accept payments? 

Businesses partner with acquiring merchants to accept payments because it's all about meeting customer needs. When customers want to pay with cards, businesses need to be ready. Having an acquiring merchant allows businesses to say "yes" to card payments, making things convenient and easy for their customers.

It's not just about convenience, though. Accepting card payments through merchant acquiring gives businesses a competitive edge. It shows customers that they're up-to-date and accessible, attracting more people who prefer using cards for transactions.

Partnering with an acquiring merchant also opens doors to global opportunities. Businesses can accept payments from customers all over the world, expanding their reach and potential for growth.

On top of that, acquiring merchants simplify the payment process. They handle the technical stuff like authorizations and settlements, freeing up businesses to focus on what they do best.

There's also the peace of mind that comes with having a partner in risk management. Merchant acquiring helps businesses stay on top of fraud prevention, manage chargebacks, and stay compliant with payment regulations, reducing financial risks.

How Epos Now handles payment processing and acquirers 

Epos Now makes payment processing easy and transparent for businesses. Our integrated solutions have no hidden fees, allowing businesses to accept payments conveniently. With our service, businesses can:

  • Seamlessly integrate payment processing into their retail POS or hospitality POS systems.
  • Offer customers preferred payment options like Visa and Mastercard at a fixed rate.
  • Accept various payment methods, including chip and pin, contactless, and remote payments.
  • Access detailed payment reports for a 360-view of business transactions and cash flow insights.
  • Enjoy a transparent pricing model with no hidden fees or complicated setups.

Epos Now provides a range of payment devices, global support, and PCI compliant terminals for safe and secure transactions. With over a decade of experience, we are a trusted payment processor used by thousands of businesses worldwide.

Final thoughts

So, to wrap things up, finding the right financial partner to handle your card payments is a big deal for businesses. These partners, called merchant acquirers, do a lot behind the scenes, like setting up accounts and making sure payments go smoothly.

When you're picking a partner, think about what they offer, how much they charge, and if they're good at keeping things safe and secure. You also want someone who can grow with your business and be there when you need help.

Partnering up with a good credit card acquirer means your customers can pay easily, you can stay competitive, and you can focus on growing your business. Companies like Epos Now make it simple with clear pricing, easy integration, and reliable support.

So, choose wisely, and watch your business thrive in today's digital world!

Enjoyed this blog? Learn more about payment processing with our additional resources:

  1. Learn How does payment processing work here.
  2. Explore third-party payment processors and their role in transactions.
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