Acquiring bank

An acquiring bank (also known simply as an acquirer) is a bank or financial institution that processes or debit card payments on behalf of a merchant. The acquirer allows merchants to accept digital payments from card issuers (financial institutions and fintechs) sanctioned by the major card associations such as Visa, MasterCard, Discover, China UnionPay, American Express.

The acquiring bank and often times a third party processor such as Global Payments, Elavon, Fiserv or FIS, enters into a contract with a merchant and offers it a merchant account, which is separate from the merchant's operating account. This arrangement provides the merchant with the ability to settle funds received by a purchaser's issuing financial institution. Under the agreement, the acquiring bank exchanges funds with issuing banks on behalf of the merchant and pays the merchant for its daily payment-card activity's net balance — that is, gross sales minus reversals, interchange fees, and acquirer fees. Acquirer fees are an additional markup added to association interchange fees by the acquiring bank, and those fees vary at the acquirer's discretion.