22 min read
What is an Acquirer in the Payments Industry?
Daniel Kroytor
October 6, 2025
An acquirer is a bank that processes payments and maintains a merchant’s account.
Sometimes also referred to as an acquiring bank or a credit card bank, an acquirer is the institution on the merchant end of payments. This is the institution that receives the authorized payments from a customer after the transaction has gone through the customer’s bank.What does a merchant acquirer do?
The general role of an acquiring bank is to support the merchant's business model and maintain all transactions made during business hours. Acquirers aren’t just there to receive money from completed transactions. They must also be prepared to send money back to an issuing bank in the event that a consumer makes a return or is accidentally overcharged. While the consumer’s bank is the financial institution that can approve or deny a transaction based on available funds, it is the acquirer that initiates the transaction. It then awaits communication from the issuing bank on whether or not the payment will be accepted. Once a transaction is approved, the merchant’s bank will receive the funds. If a customer’s purchase is denied, the acquiring bank can tell you why.Understanding acquirers and how to become one
The bank or financial institution must undergo a strict regulatory process to become licensed. Acquirers must meet the requirements of card schemes and comply with financial institution regulatory requirements. Local financial regulators will license the banks if they meet standards. Similar to how an acquiring bank must go through the process of becoming licensed, a merchant must also go through an application process in order to work with an acquirer. Acquirers might ask for information like proof of ownership, identification of business owners, financial history and business records. In the same way that an issuing bank bases credit limits on good financial standing and income, an acquiring bank might make a contract based on solid financial records. This is their way of determining how much risk would be involved in signing a contract with a merchant and if it makes sense to process payment card transactions for them at all.How an acquiring bank differs from an issuing bank
In payment processing, two types of banks play key roles behind every transaction: the acquiring bank and the issuing bank. While both are involved in the same card payment process, they represent two opposite sides of the transaction. An acquiring bank (or merchant acquirer) works with merchants. It provides them with merchant accounts, allowing them to accept card payments online or in-store. When a customer pays with a credit or debit card, the acquiring bank routes the payment request through the relevant card network (Visa, Mastercard and other card networks) to the issuing bank. Once approved, the acquirer deposits the funds into the merchant’s bank account after deducting applicable fees. An issuing bank, on the other hand, represents the customer. It’s the financial institution that provides credit or debit cards to consumers. The issuing bank authorizes or declines transactions based on the cardholder’s available funds or credit limit and ensures payment to the acquiring bank for successful transactions. Together, these two banks make up the foundation of the card payment ecosystem. The acquirer serves the merchant, and the issuer serves the cardholder.| Acquiring bank | Issuing bank | |
|---|---|---|
| Role | Works with merchants to process card payments | Works with consumers by issuing credit or debit cards |
| Primary Customer | Merchant (business owner) | Cardholder (consumer) |
| Main Function | Receives payment authorization requests, settles funds to merchant account | Approves or declines transactions, provides funds to the acquirer |
| Revenue Source | Merchant fees (processing, interchange markup, etc.) | Interest, card fees, and interchange earnings |
| Risk Exposure | Chargebacks and fraudulent transactions from merchants | Credit default or unauthorized card use by cardholders |
| Example | JPMorgan Chase (as acquirer for businesses) | Citibank (as card issuer to customers) |
The other players involved in processing payments
Let’s break down the other players in the full payment process so it’s easier to see where the acquirer stands in all this.- Consumers and issuing banks – Issuing banks issue credit cards to consumers to use for spending, e.g. electronic payments or debit card payments.
- Credit card network – This is the network attached to the credit card (Visa, Mastercard, etc.). It helps the issuing bank communicate with the consumer at the point of sale.
- Payment processor – This is what a merchant uses to route transaction data to the appropriate parties. A payment processor will connect the issuing bank to the acquiring bank, and transactions will be approved or denied.
- Merchant and acquiring bank – Once the acquiring bank receives money from the issuing bank, the money will be sent to the merchant, and the full transactional arch is complete.