The Role A Merchant Acquirer Plays In Accepting Payments
Accepting credit cards allows you to receive payments, therefore it is important that you choose partners such as a credit card processing company and merchant acquirer who are integral partners beyond processing payments, making it a critical decision for your business.
A merchant acquirer is a financial institution that processes payments on behalf of a business or a merchant. The merchant is the seller in terms of payment, or a person or an organization who sells goods or services to paying clients.
The financial institution or bank that handles payments submitted by customers to a business is known as a merchant acquirer. They’re also referred to as an acquiring bank. They’re called the acquirer since they accept money on behalf of the merchant when a customer pays.
What Does A Merchant Acquirer Do?
Merchant acquirers are companies that collect payments made by credit cards after they have been accepted by retailers. They are an element of the payment process that ensures customers can pay safely and merchants get paid.
The merchant acquirer interacts with some of the following during the payment cycle:
- Verifying the card’s and cardholder’s authenticity
- Data security for cardholders
- Accepting payment from the bank that issued the card
- Getting the money to the merchant
- Refunds, chargebacks, and returns are made easier.
- Providing merchants with payment terminals
- Supporting merchants’ online payment portals.
Basics Of Payment Processing
The payment flow will follow is facilitated by the help of a few components working together;
- At the payment terminal, the customer inserts or taps their credit or debit card.
- The card information is encrypted and sent to the merchant acquirer by the terminal.
- The credit card association listed on the customer’s card receives a notification from the merchant acquirer.
- The credit card association approves the payment and requests authorization from the issuing bank.
- The transaction is approved by the issuing bank, and the credit card association is notified.
- The permission is communicated to the acquiring bank by the credit card association.
- After the transaction clears, the issuing bank sets a hold on the cardholder’s account, which will then turn into a withdrawal.
- To confirm the transaction, the card terminal or point of sale system issues a receipt.
- After a few hours or days, funds are sent to the merchant’s account.
How Can The Acquirer Facilitate The Customer’s Payment Process?
A merchant account is required for merchants who want to accept credit and debit card transactions on their website. They are able to persuade one to sign a contract with an acquiring bank.
The acquirer authorizes or rejects card transactions and connects to the issuing bank on behalf of the merchant during the payment process. The funds are placed into the merchant’s account if the purchase is accepted.
The acquirer is responsible for the following after receiving card information from the payment gateway:
- Authorization– inquiring with the issuer about the validity of the card and whether there is sufficient money in the account to execute the transaction.
- Authentication– an optional verification of the cardholder’s identity performed after entering the card details during a purchase.
Every card transaction you accept for your business will require the use of a merchant acquirer. Therefore, it is important that you select a platform such as OpenPayd and receive access to a full range of banking and payments services, all delivered via a single, developer-first API. You will also need a merchant acquirer if you want to handle payments, which comes at the cost of a charge with each transaction to use their services.