An acquirer, also known as an acquiring bank, member bank or merchant bank, is the bank that functions as an intermediary between the merchants and the issuing banks within the card association in electronic transactions. Actually, this bank is in charge of the data flow between these two parties and its name derives from the fact that it offers credit card processing services to the issuing banks within an association. In other words, this financial institution acquires credit card payment from the credit card association and it is the latter and not the former the one that actually authorizes or rejects the transaction.
However, in order to perform a safe transaction, the acquirer requires of a payment processor which is the provider of software technology to establish the connection with the card associations. The processor can assume two forms: it can be a bank division or it can be a completely independent institution that works in partnership with the bank.
Yet, the acquirer has to also be understood as the middleman between the merchants and the customer’s capital, that means, that when a credit card transaction is completed this financial institution accepts capital from a customer and makes a deposit of the payment with the deducted fees into the merchant's account and from there into his business checking account. This strategic position has provided it with a great international significance attributable to its progressive growth in both its customer base and the number of transactions and thus, it has evolved into a key player in the global economy.
As a matter of fact, the term “acquiring bank” is very ambiguous for the reason that depending on the market, the card association brands can also function as such. What is more, even the Independent Sales Organization (ISO) which usually serves as bank agents can also operate as an acquiring bank since the banks and the payment processors are unable to always perform this function. While these situations are more an exception than a rule, it is important to keep them in mind.
Among the largest acquirers are: Chase, Citibank, Bank of America, HSBC and Wells Fargo.
The card association is the one that authorizes the acquirer to issue cards with its respective logo. The most renowned card associations are Visa, MasterCard, American Express, Discover, Diners Club and Japan Credit Bureau.
Among the acquiring bank’s main responsibilities are the offering of the following special services: transaction authorization, clearing and settlerment. Likewise, it is accountable to ensure that merchants at any level meet the “Payment Card Industry Data Security Standards” (PCI DSS). Indeed, this specific kind of bank assumes all the risk involved in every single payment transaction, because it is the bank itself the one that provides the merchant with a credit line so that it can be able to accept credit card payments.