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What Is A Merchant Acquirer?

A merchant acquirer is a licensed bank or other financial institution that handles the processing of card payments on behalf of a merchant. 

Merchant acquirers are also known as acquiring banks or merchant banks.

What does a merchant acquirer do and how do they operate? 

An acquiring bank facilitates a sales transaction, receiving the merchant’s requests for payment authorisation and directs them to the issuing bank for approval or rejection. If the issuing bank approves the payment, the merchant acquirer receives the money and transfers it to the merchant’s bank account.

The acquiring bank also processes refunds and returns for the merchant and pays the card scheme fees for using the payment networks, such as Visa, Mastercard and American Express.

UK Merchant Acquirers

American ExpressElavonSecure Trading FS (Online only)
Bank of Ireland (Evo Payments)First Data / FiservTruevo
BarclaycardGlobal PaymentsValitor
BorgunLloyds Bank CardnetWirecard

How and where do merchant acquirers fit into the payment cycle?

An acquiring bank sits between the merchant and the customer’s card scheme and issuing bank, providing a secure framework to verify transactions and prevent fraud.

In the seconds after a customer taps a contactless payment card on a terminal, enters a pin number, or clicks confirm on an online order, the acquirer handles:

  • Customer authentication. The acquirer checks the identity of the cardholder, the validity of the card and whether the card account holds enough money to cover the purchase.
  • Payment authorisation. If the card is authenticated by the relevant card scheme, the issuing bank authorises the merchant acquirer to go ahead with the transaction.
  • Settlement. Once the payment is authenticated and authorised, the acquirer transfers the money from the cardholder’s account to a merchant account to hold it on behalf of the merchant. It then subtracts its processing fees and sends the remaining money to the merchant’s bank account.

The merchant acquirer assumes the risk of dealing with fraud and customers charging back purchases, effectively guaranteeing the merchant’s account.

Why do I need a merchant acquirer?

Some issuing banks provide acquiring services, but they typically charge high fees and require merchants to sign long-term contracts.

Accepting payments without an acquirer is possible if a merchant chooses a payment facilitator like Paypal, Zettle or Square, rather than taking card payments directly, as these providers interact with the issuing banks.

What should I ask a potential acquirer?

It’s important to understand the services a merchant acquirer offers and whether they’re compatible with your business needs. 

In reality, you are unlikely to deal directly with an acquirer and will use a Merchant Service Provider (also known as MSPs, ISOs or Independent Sales Organisations) that recruit merchants on behalf of an acquiring bank and takes a % of the merchant transaction fees as payment for their sales and customer service work. 

Questions to ask include:

  • Which payment cards and methods does it accept?
  • Which payment gateways does it work with?
  • Which countries and currencies does it support for payments and settlements?
  • Does it comply with Payment Card Industry Data Security Standard (PCI DSS) regulations to maintain a secure environment for processing payment information?
  • Does it offer fraud protection measures like Visa’s 3D Secure, which requires customers to authenticate their identity?
  • What is the settlement period for transferring funds from the merchant account?
  • Does it support recurring transactions?
  • How does it provide customer support?
  • What are its fees and how are they structured?

What fees will they charge?

The fees you pay will be determined by the merchant service provider you use (they will incur merchant acquirers fees which are covered the fees they charge you). They charge various fees for their services and the risks they assume – some of which are fixed costs and others are a percentage of transaction income but many will negotiate unless charging fixed fees. If they don’t provide a transparent run-down of their charges, ask them to confirm the following fees:

  • Application and account setup costs
  • Recurring account charges
  • Transaction fees for customer authorisation and money transfer
  • Transaction fees for certain payment methods, e.g. foreign issued cards, credit cards
  • Currency conversion fees
  • Settlement charges
  • Transaction limits
  • Processing costs for refunds, chargeback or disputes
  • Charges for account features

Many small and medium-sized enterprises (SMEs) aren’t getting the best deal from their merchant acquirer. According to a report by the Payment Systems Regulator in 2020, SMEs tend not to negotiate good terms or switch to another acquirer to save on costs which is what our company helps you to do

That’s little surprise, as it can seem daunting to get to grips with the breadth of information out there about card processing and payment services.


What’s the difference between an acquiring bank and an issuing bank?

Acquiring banks and issuing banks operate at different stages of the payments process. A merchant acquirer processes debit and credit card transactions on behalf of a seller, while an issuing bank issues cards to consumers and approves payments from the card accounts.

How do I pick the right merchant acquirer for my business?

If you fill in out our short form we can help you find the best merchant acquirer for your business.

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