What is a merchant acquirer, and how can it help your business?

A merchant acquirer is a bank that processes and settles your daily card transactions. Here's how you can find one


If you are setting up your business to accept credit cards for the first time, you’ve probably heard you need an account with a “merchant acquirer.” Read on to find out what a merchant acquirer does and how it differs from a payment processor.

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Many small business owners are taking steps to get set up to do business in a more digital world.

With consumers gravitating toward online and contactless payments, it’s a great move for building your business.

If you are setting up your business to accept credit cards for the first time, you’ve probably heard you need an account with a “merchant acquirer” and need a “payment processor” so you can accept credit card payments – and wondered exactly what they are. Some of the terms in the world of payment processing are confusing.

Before we dive into what they are, it’s important to be aware that generally, you won’t have to go out and find these entities on your own. If you enlist the services of a merchant services provider, they will often provide a package in which these services are bundled.

That said, it’s important to understand what you will be getting when you sign on with a merchant services provider. Here’s a crash course in what merchant acquirers and payment processors do.

What is a merchant acquirer?

A merchant acquirer is a bank that processes and settles your daily credit card transactions.

When your customers make purchases each day, the money from those transactions is deposited in your account with this bank. The bank, acting as the intermediary in the credit transaction, then pays you, minus any settlement and discount fees for its service.

Next, it goes on to settle the transactions with the credit card issuer or association. It is essentially a middleman.

See related: How do credit cards work?

How does a merchant acquirer differ from a payment processor?

In getting set up to accept credit cards, you may have also come across the term payment processor.

A payment processor is a business that runs what is known as a processing network to facilitate credit card transactions. The payment processor authenticates payment information and transmits the funds from the transaction with your customer to your business after the transaction is complete. Payment processors also ensure that the bank and credit card association get their share of the funds from the transaction.

Do they sound a bit similar? It’s not your imagination.

A merchant acquirer and payment processor are sometimes one and the same. In other cases, a merchant acquirer and payment processor are different entities. In the latter cases, the processor acts as a sort of technology provider to the bank, authorizing payments and supporting the funds transfer.

The payment processor may also provide other products and services. It may provide the equipment you use to accept cards, as well as security solutions and help with PCI compliance.

See related: Which mobile card reader should I get for my business?

How to find a merchant services provider

Need some help navigating the world of credit card acceptance? Often, your business banker and accountant can be good resources. They are often familiar with various merchant services providers and can direct you to one who is suitable for your size business and your industry.

It is important to look at several plans before you make a decision, because costs and services can vary considerably. Such advisors often get feedback from other business owners they serve and can help you to make the best decision for your business.

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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