Acquirer – definition in the payment process [A simple guide]
Tips / 27.10.2021
The world of payment acceptance is dotted with many words, one such being an “acquirer”. If this term is new to you and you’re a merchant who’d like to accept payments through a POS device or even online through your website or online shop, then this blog post is for you.
Here, we cover what is an acquirer, what steps does the payment process involves, and what you need to look out for when you sign an agreement with an acquirer. So, let’s dig in.
What is an acquiring bank?
First, it’s important to know that there are not only acquiring banks but also merchant acquirers, which are financial institutions that do the job of acquiring.
Essentially, the acquirer definition is – a merchant acquirer or a gaining bank is an institution that enables a merchant to accept payments through a POS device or online methods by offering them a reliable merchant account into which funds from customers are ultimately settled.
The payment process
The merchant payment process usually goes something like this:
- The cardholder presents their card at the merchant’s POS device, and the communication process begins.
- The cardholder’s details will be submitted via the merchant’s gateway to the acquiring bank, which will then request the payment from the card scheme such as Visa or Mastercard.
- The card scheme will then contact the customer’s issuing bank to determine whether the funds are available in the customer’s account.
- The transaction is then approved or declined and this information is conveyed back to the card scheme, which communicates with the acquiring bank, and notifies the merchant about the status.
- Ultimately, in what seems a matter of seconds, a lot of communication takes place!
Things to look out for
If you’re on the market, ready to accept payments, you’ll definitely want to sign up with a merchant acquirer. However, there are certain considerations you need to keep in mind before you sign on the dotted line.
Here are a few of these:
- Is the merchant acquirer PCI compliant? This will provide an extra layer of security for your transactions.
- Do they offer a free, multi-currency merchant account?
- How will you pay for your payment acceptance needs? Will you pay a transaction rate for each transaction or will there be a monthly fixed cost added in as well?
- How many currencies will you be able to accept at your business?
- Will you get an instant settlement and access to your received funds?
- And one more: will you get access to 24/7 customer support?
All these are important considerations to keep in mind when you sign up with a merchant acquirer.
Now that you know the meaning of the term acquirer, you’re one step closer to accepting seamless payments from your customers via their credit, debit, or even prepaid cards!
This is an important move for you because card payments are becoming increasingly common and widely used in a Covid-19 driven landscape.
Disclaimer: Please be aware that the contents of this article and the myPOS Blog, in general, should not be interpreted as legal, monetary, tax, or any other kind of professional advice. You should always seek to consult with a professional before taking action, since the particulars of your situation may materially differ from other cases.