An acquiring bank, also known as an “acquirer” or “merchant bank,” is a financial institution that facilitates the acceptance and processing of credit and debit card transactions on behalf of merchants.
In the realm of payment card transactions, the acquiring bank acts as an intermediary, connecting merchants with issuing banks (commonly referred to as the “issuer”). Issuing banks are responsible for providing consumers with credit and debit cards, enabling them to make card payments. This connection between merchants and issuing banks is established through a card network, which we’ll delve into in more detail shortly.
It’s important to note that acquiring banks are not traditional consumer-facing banks with physical branches and ATMs. Instead, they operate as intermediaries in credit card processing for merchants. Payment card transactions, encompassing purchases, refunds, chargebacks, and other related activities, involve multiple participants beyond just the cardholder and the merchant. The acquiring bank always plays a role in facilitating these transactions.
Additionally, acquiring banks bear a significant portion of the financial risk associated with credit card purchases. They also assume responsibility for ensuring the secure flow of data and hold initial liability in case of disputes or issues arising from the transaction process.
Written by Andrii Vovk