Introduction

An acquirer is a financial institution that acts as an intermediary between merchants, card payment networks (such as Visa and Mastercard), and the card-holders bank (“issuer”). Merchants can enter into contracts with acquirers allowing them to accept card payments. Acquirers are financial institutions that exchange funds with issuing banks and settle them to merchants minus things like refunds, interchange fees, and other fees charged by the acquirer.

What is a payment acquirer

A merchant acquirer, sometimes referred to as an acquiring bank, merchant bank or simply as an acquirer, is a financial institution that is licensed by card schemes (such as Visa and Mastercard) to authorise credit and debit card transactions for merchants. The acquirer establishes and maintains the merchant’s account where funds are settled, and takes on the risks of card fraud, disputes and chargebacks. This contributes to a seamless and reliable payment experience for both merchants and customers.

When a business decides to accept card payments online, they partner with a merchant acquirer (like Transfi) to make this possible. The acquirer will set up an account for the merchant and start providing services:

1. The first step is onboarding merchants. This involves assessing the merchant's creditworthiness, business type, and other factors to determine the risk associated with processing payments for that merchant.

2. Once this is done, the acquirer sets up a merchant account for the seller. This is where funds from card transactions are settled.

3. When a customer buys an item from the merchant’s online store, the customer’s payment data is sent to the acquirer by the payment processor. This information is forwarded to the respective payment networks (for example, Visa, American Express or MasterCard) who send it to the bank that issued the customer’s card. 

4. After the transaction is approved, the issuing bank transfers the funds to the acquirer, and the acquirer settles the funds into the merchant’s account, after deducting any fees. 

Acquirer vs payment processor

Payment Processor

The term payment processor is very general. It has become something of a 'catch all' term for the many various entities involved that processes payment transactions. The processor passes the transaction messaging to the merchant acquirer, whereas the acquirer manages the merchant's account.

Merchant Acquirer

A merchant acquirer, also known as an acquiring bank, is a financial institution (or a bank) that helps companies process credit and debit card payments. This is the entity that holds a merchant’s account and accepts the deposits from the merchant’s sales. Basically, the acquirer is the entity that enables a business to accept card payments.

Transfi, as a payment acquirer makes the setting up for the merchants very easy, it comes with no following costs or hidden costs and provides transaction flexibility providing various currencies and digital assets to transact in. 

Why your business needs a payment acquirer

Accepting credit card payments is of fundamental importance for business merchants. Therefore, having an acquirer allows the business to enjoy several benefits and reach the full potential of selling to a high-growth market, some benefits are stated below

1. Attract more customers

As a large part of the consumer market uses credit cards for purchases, providing an efficient acquirer is a good way to attract customers who value diversity and efficiency in payment methods.

2. Offer greater security

Counting on companies dedicated to intermediating bank transactions made with credit and debit cards is a way to ensure more security in operations. With expert risk analysis, built upon the acquirer company’s extensive payments expertise, you can grow your sales number with security and efficiency.

The acquiring company is a key partner for any merchant and, for that partnership to be successful, choosing an acquirer with up-to-date and reliable security measures is a must. That includes being PCI compliant, a must-have certification that ensures the acquirer is ready to fully ensure the security of your transactions and your customers’ financial data.

3. Outsource the billing

When the company works with an acquirer, it no longer has to worry about the bureaucracy involved in charging directly to the consumer.  This intermediary company will be responsible for this task, and you can receive your sales amount at once, according to your settlement definitions with the acquirer. Many acquirers also offer the possibility to streamline and facilitate operations involved in transaction management. After all, with an acquirer, it is possible to improve your finance  management processes.

Transfi provides all payment solutions with a simple, easy to use platform catering users of many currencies and payment methods to come together and access global payment in the blink of an eye through Transfi’s Bizpay.

Conclusion

Merchant acquirers and payment gateways are pivotal in the processing of card transactions. A merchant acquirer handles the authorisation and settlement of transactions between businesses and issuing banks. They manage merchant accounts, verify transaction details, and assume risks associated with card transactions. A payment gateway serves as the technical interface of the payment process, collecting and encrypting customer payment information and conveying transaction outcomes to both customers and merchants.

They do not directly interact with card networks or issuing banks. Instead, they communicate through payment processors. While payment gateways maintain direct relationships with merchants and customers, merchant acquirers primarily engage with businesses, managing their accounts and ensuring funds settlement post-transaction approval.

Transfi provides an easy to set up platform, API powered payment processing and the backend tasks of merchant-acquiring all in one place with the user required to carry out the simplistic setup and make the best out of business financing.

Frequently asked questions (FAQs)

1. What is a payment acquirer?

A merchant acquirer, also known as an acquiring bank, is a financial institution (or a bank) that helps companies process credit and debit card payments. This is the entity that holds a merchant’s account and accepts the deposits from the merchant’s sales. Basically, the acquirer is the entity that enables a business to accept card payments.

2. How does a payment acquirer work?

An acquirer is a financial institution that acts as an intermediary between merchants, card payment networks (such as Visa and Mastercard), and the card-holders bank (“issuer”). Merchants can enter into contracts with acquirers allowing them to accept card payments. Acquirers are financial institutions that exchange funds with issuing banks and settle them to merchants minus things like refunds, interchange fees, and other fees charged by the acquirer.

3. What is a payment processor?

A payment processor is a company or service that facilitates electronic transactions between customers and businesses by processing and authorising credit card, debit card and other digital payment methods. A payment processor acts as an intermediary between the customer's bank (issuing bank, or issuer) and the business's bank (acquiring bank, or acquirer), ensuring that funds move securely from the customer's account to the merchant account.

4. Why does a business need a payment acquirer?

• Attract more customers 
• Offers great security
• To outsource billing and finances

5. Why is Transfi the best choice for your business for payment acquiring and processing?

Transfi, as a payment acquirer makes the setting up for the merchants very easy, it comes with no following costs or hidden costs and provides transaction flexibility providing various currencies and digital assets to transact in. Transfi provides an easy to set up platform, API powered payment processing and the backend tasks of merchant-acquiring all in one place with the user required to carry out the minimal steps setting-up and make the best out of business financing.