What is an Acquirer?

An acquirer is a financial institution or bank that processes and settles payment transactions on behalf of merchants, enabling businesses to accept credit, debit, and other electronic payments from customers.

Key responsibilities of acquirers include:

• Transaction Processing: Handling the authorization and settlement of customer payments between merchants and payment networks (e.g., Visa, Mastercard).
• Merchant Account Management: Providing merchant accounts that businesses need to accept electronic payments.
• Risk Management: Monitoring transactions for potential fraud and ensuring compliance with payment card industry (PCI) standards.
• Integration and Technology Support: Supporting merchants with secure payment gateways, point-of-sale (POS) systems, and advanced authentication methods such as passkeys.

Acquirers play a critical role in the digital payment ecosystem by securely managing financial transactions, reducing fraud risks, and ensuring smooth payment experiences for merchants and customers alike.

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In digital and traditional commerce, acquirers act as intermediaries connecting merchants, issuers (banks providing cards to consumers), and payment networks. Their primary functions include:

• Payment Authorization: When a customer initiates a transaction, the acquirer receives the payment details from the merchant's system and forwards this request to the card issuer via payment networks. The issuer either approves or declines based on available funds or fraud checks, and this information is relayed back through the acquirer.

• Transaction Settlement: Acquirers facilitate the transfer of funds from customers’ bank accounts to merchants’ accounts, typically within one to two business days. They reconcile transactions and handle the associated fees with payment networks.

• Merchant Onboarding and Compliance: Acquirers evaluate new merchants before approving merchant accounts, checking credit history, business legitimacy, and compliance with standards like PCI DSS (Payment Card Industry Data Security Standard).

Acquirers directly impact merchant revenue and operational efficiency through:

• Smooth Payment Flow: Efficient payment processing reduces transaction times and minimizes customer friction, increasing sales conversions.
• Fraud Prevention: Acquirers provide merchants with advanced fraud detection tools, such as risk scoring and behavior analytics, significantly reducing chargebacks and losses.
• Integration Capabilities: Modern acquirers offer integrated payment solutions, including APIs, SDKs, and passkey-enabled authentication methods, allowing merchants to implement seamless checkout experiences.

Acquirers and issuers are distinct but complementary components of the payment ecosystem:

As transaction security becomes increasingly vital, acquirers adopt advanced authentication methods like passkeys. Passkeys offer several benefits:

• Enhanced Security: Eliminates the risks associated with traditional passwords, such as phishing or credential stuffing attacks.
• Improved User Experience: Faster, frictionless payments lead to higher customer satisfaction and lower cart abandonment rates.
• Reduced Fraud Rates: Passkey authentication significantly reduces the likelihood of fraudulent transactions, protecting merchant revenue and reducing chargebacks.

By integrating secure authentication solutions such as passkeys, acquirers maintain competitive advantages, boost merchant confidence, and ensure robust, trustworthy payment systems.

An acquirer processes and settles payment transactions for merchants, providing essential services like transaction authorization, fraud management, and settlement of funds.

An acquirer manages merchant accounts and processes payments on behalf of merchants, whereas an issuer provides payment cards to customers and authorizes or declines their transactions.

Examples of acquirers include financial institutions such as JPMorgan Chase, Bank of America, and fintech payment processors like Adyen, Stripe, and Worldpay.

Secure payment methods help acquirers minimize fraud, reduce chargebacks, enhance merchant trust, and ensure compliance with payment industry standards.

Passkeys improve transaction security and user experience by eliminating vulnerable passwords, thus reducing fraud rates, minimizing checkout friction, and increasing customer satisfaction.