Acquiring Bank Definition

Merchant Account Acquiring Bank Explained:

What is an Acquiring Bank? Sometimes simply called an “Acquirer,” an Acquiring Bank or Acquiring Financial Institution is the entity that supplies the actual merchant account that allows a merchant to accept credit card payments. Acquiring Banks primarily serve a back-end role and generally do not service the merchants directly. Instead, the majority of Acquiring Banks only facilitate the exchange of funds between card-issuing banks and merchants, and rely on third-party sales organizations to sell the accounts and supply customer service. In a few rare cases, Acquiring Banks not only serve as a processor but also market, sell, and service the merchant accounts directly.

Acquiring banks collect a small set fee for each credit card transaction and play a minimal role in the overall cost of the merchant processing fees. The majority of the costs associated with accepting credit cards come from Interchange fees and processor/provider markup fees.

Acquiring Banks also assume much of the risk in the credit card processing network because merchant accounts are a line of credit and not a holding account like a checking or savings account. In the event a merchant becomes insolvent, and suffers fraud or chargebacks, the acquiring bank suffers the loss if the funds cannot be recovered either from the merchant or the customer. For this reason, most Acquiring Banks require any individual/entity wishing to accept credit cards to undergo a credit check and/or supply financial data before establishing a merchant account.

Acquiring Bank Video Explanation

Use of this video does not constitute an endorsement of any kind by CardPaymentOptions.com.

Phillip Parker is a former merchant services sales agent who believes the industry has been overrun by people who engage in fraud and deception in order to steal from hard working business owners. He created this website to help you avoid the bad players, save money on fees, and to get peace of mind with your merchant account. If you would like to help support his work, learn more about our cost reduction service. We can evaluate your statement, tell you exactly how much you're overpaying, and then help you dramatically reduce your fees with your current credit card processor. Looking to switch instead? See our list of the best merchant account providers.

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