Acquiring is a key term in the payment processing industry that refers to the process by which card transactions are authorized, processed, and settled. It involves several entities, including the following:
- acquiring bank (also known as the acquirer or merchant bank)
- the issuing bank (or issuer)
- the merchant
- the cardholder
The acquiring bank provides the service to the merchant that allows them to accept card payments from customers.
When a customer uses their card to purchase goods or services, the acquiring bank authorizes the transaction and communicates with the issuing bank to confirm the cardholder has sufficient credit or funds. The funds are then transferred from the issuing bank through the acquirer to the merchant’s account.
The term “acquiring” comes from the fact that the acquiring bank “acquires” the transaction from the merchant and is responsible for ensuring the merchant gets paid. The acquirer also plays a significant role in dealing with chargebacks and dispute resolution.