What is acquirer?
Acquirer is a financial institution or bank that participates in the process of processing transactions and also helps to speed up the process of making a purchase.
Acquiring banks receive and process card payments of those banks that are members of the worldwide association of payment systems. Payment systems that are part of this association:
- American Express;
- Diners Club;
- Japan Credit Bureau;
- China UnionPay.
Credit cards of these systems are used all over the world.
Acquirers do not process payments directly, but through intermediaries – payment providers.
The acquirer charges a commission for its services, which is included in the total transaction fees charged by payment providers. Markup fee and interchange fee make up the bulk of this fee.
Acquirers take on a significant portion of the risks.
Since the fees are small, this is one of the reasons why merchants need to turn to third-party payment processors.
Despite their apparent uselessness, acquirers play a key role in the process of processing transactions.
Why do we need acquiring banks?
As we mentioned above, banks are not always able to process payments for each merchant who submits an application. But if payment systems perform all the necessary operations, then why do we need acquirers?
Since payment processors are not bank installations, they can only provide a limited number of solutions. Indeed, many acquirers can process credit card payments, and the largest of them do it. However, payment providers are needed to streamline this process. Moreover, if you want payments to go through instantly, you just need to cooperate with an acquiring bank. They provide a temporary loan for an equal transaction amount until the payment is made. As soon as the transaction is considered successful, the bank returns this “loan”.
Making payments is always a risk, so high-risk enterprises are less likely to get a payment gateway.