An acquirer, also known as an acquiring bank, is a financial institution that processes credit and debit card payments for merchants. It processes transactions, settles funds, and serves as an intermediary between merchants, card networks, and issuing banks. Acquirers provide the necessary infrastructure and services for businesses to securely handle electronic payments, playing a vital role in the payment processing ecosystem. The acquirer usually charges fees for these services, typically including a percentage of the transaction amount and a fixed fee per transaction.
An acquirer forms a relationship with a merchant, providing them with the necessary tools and services to accept card payments. Here's a simplified overview of how acquirers facilitate transactions between online sellers and buyers:
Throughout this process, acquirers also monitor for fraudulent activity and ensure compliance with industry standards and regulations.
Acquirers perform several crucial functions in the payment processing ecosystem:
Overall, acquirers have an integral role in enabling businesses to accept and process card payments efficiently and securely.
It's worth noting that many of these acquirers operate globally, and the payments landscape is continually evolving through mergers, acquisitions, and new entrants to the market. Some of these companies may offer both acquiring and other payment services.
Acquirers, Payment Service Providers (PSPs), and Payment Facilitators (PayFacs) are important yet distinct entities in the payment processing ecosystem. As mentioned previously, acquirers, or acquiring banks, handle credit and debit card transactions for merchants, manage risk, and settle funds through direct relationships with card networks.
PSPs serve as intermediaries between merchants and multiple acquirers, offering a single integration point for accessing various payment methods. They streamline payment processing by managing relationships and providing services like fraud prevention.
PayFacs, a type of PSP, onboard sub-merchants under a master merchant account, allowing quick payment setup. They assume more risk by being responsible for sub-merchants’ compliance.
Though these roles differ, there can be overlap. Some large PSPs may also function as acquirers, and vice versa. The choice among them depends on a merchant's specific needs, industry, and size.
An acquirer and an issuer (or issuing bank) each have differing roles in the payment ecosystem.
In contrast to the acquirer, the issuer is the bank or financial institution that provides credit or debit cards to consumers. For example, JPMorgan Chase & Co. in the United States and Barclays in the United Kingdom. Issuing banks hold the consumer’s account and are responsible for authorizing transactions, billing the cardholder, and ultimately collecting payment from them. The issuer bears the risk of the cardholder defaulting on payments and works with the acquirer to settle transactions.
When chargebacks are routed through the card networks to a merchant's acquiring bank, the relevant information is transmitted to their dispute management system by the PSP or appears in their payment processor’s backend. At the same time, we retrieve this information into our platform and pull in the chargeback data, then submit evidence back into the acquiring network on their behalf, particularly for fraud-related cases. This process happens as soon as we receive the chargeback information.
When it comes to managing chargebacks, Justt offers a robust solution that seamlessly integrates with many types of acquirers. Justt automates the chargeback dispute process, helping merchants efficiently handle disputes, minimize revenue loss, and maintain focus on growing their business.
Whether you're in retail, e-commerce, or any other industry, choosing an acquirer that aligns with your specific needs, combined with Justt's chargeback management, can be a critical factor in your success. Speak with us today to start securing your hard-earned revenue.
