Merchant acquiring is the service of signing up a business to accept card payments, routing its transactions into the card networks and paying the money from those sales into the business’s account. The company that does this is the acquirer, sometimes called the acquiring bank or merchant acquirer. It holds the contract with the merchant and, under card scheme rules, carries the financial risk if that merchant’s sales go wrong.

How it works

Visa and Mastercard run what the industry calls a four-party model. The cardholder holds a card from an issuer, which is the bank or fintech that extends credit or holds the account. The merchant holds a contract with an acquirer. The network sits in the middle, carrying messages and calculating who owes whom, but it does not usually hold a contract with either the cardholder or the merchant. In a three-party scheme, by contrast, the network itself acts as both issuer and acquirer.

EU law captures the acquirer’s job in one line. The Interchange Fee Regulation defines an acquirer as “a payment service provider contracting with a payee to accept and process card-based payment transactions.” In practice the acquirer contracts the merchant, underwrites it (who owns it, what it sells, how likely it is to generate disputes), settles funds into its bank account, and stands behind it if customers claw money back or the business collapses.

Authorisation, clearing and settlement

A card payment happens in three stages. In authorisation, as the Mastercard chargeback guide describes it, the acquirer sends the request to the network, the network finds the issuer, and the issuer’s approval or decline travels back to the merchant. No money has moved yet. Clearing follows when the acquirer sends the final purchase details to the network, which passes them to the issuer for the cardholder’s statement. Settlement is when the money moves: the issuer pays the network, the network pays the acquirer, and the acquirer pays the merchant net of fees.

What merchants pay

The merchant service charge has three parts. Interchange is paid by the acquirer to the issuer on each transaction and is set by the networks, not negotiated by the merchant. Scheme fees are paid by both acquirer and issuer to Visa or Mastercard for using the network. The acquirer markup is what the acquirer keeps for its own service and risk.

In the EU, interchange on consumer cards is capped. Under the Interchange Fee Regulation (EU) 2015/751, interchange may not exceed 0.2% of the transaction value for debit cards and 0.3% for credit cards, and member states can set a lower cap for domestic credit transactions. The caps do not apply to commercial cards or to cards issued by three-party schemes.

Acquirers package these costs in two main ways. Interchange-plus (or interchange-plus-plus) pricing passes the actual interchange and scheme fees through and adds a disclosed markup, so the merchant sees what each component costs. Blended pricing charges one flat rate for all cards, which is simpler but means the acquirer earns more on cheap debit transactions than on premium credit cards. Small sellers on payment apps usually pay a blended rate.

Acquirers, processors, gateways and payfacs

These roles are often bundled, which causes confusion. The acquirer is the licensed party that holds network membership and carries the liability. A processor is the technology that moves transaction messages between the merchant, the network and the acquirer, and many acquirers outsource it. A gateway captures card details on a website or app and passes them to the processor.

Two intermediary models sit between acquirers and smaller merchants. According to Visa’s guide to acceptance entities, an independent sales organisation (ISO) is an agent of the acquirer that finds and signs up sellers, but when a seller signs with an ISO it is signing with the acquirer, and the ISO neither processes transactions nor receives settlement funds. A payment facilitator, or payfac, goes further: it signs merchant agreements on the acquirer’s behalf and receives settlement for its sponsored merchants, often called sub-merchants. That is how a small seller can start taking cards within minutes: it sits under the payfac’s master account instead of being underwritten individually by a bank. Stripe, for example, sells payfac capability to software platforms that want to embed payments for their own users. Visa requires that once a sponsored merchant’s annual Visa sales pass a set threshold, the acquirer must be added to its contract. In every model, Visa says, the acquirer remains responsible for the acts of the sellers and intermediaries beneath it.

How fintechs become acquirers

In the US, card network membership has traditionally been limited to banks, so non-bank processors have relied on a sponsor bank whose membership they use. Georgia’s Department of Banking and Finance calls this “rent-a-BIN” and says the state’s Merchant Acquirer Limited Purpose Bank Act of 2012 created an optional charter giving merchant acquirers direct access to networks such as Visa and Mastercard without a sponsor. Fiserv became the first MALPB to process card transactions after receiving its permit to begin business on 11 April 2025. Checkout.com’s MALPB charter is now live and processing volume for US enterprise merchants, and the company must employ at least 50 people in Georgia in merchant acquiring (our report).

In the UK and EU, acquiring is a regulated payment service in its own right, so a non-bank can do it with an e-money or payment institution licence and then apply for direct membership of the card schemes. Checkout.com’s UK business is authorised by the Financial Conduct Authority as an electronic money institution, and its French entity holds an e-money licence from the ACPR that is passported across the European Economic Area. Owning the licence and membership lets an acquirer set its own risk appetite and keep more margin, and supports mandates such as card acquiring and pinless debit routing for Best Buy’s Marketplace. Banks remain in the market too: Elavon’s acquiring and gateway services reach UK and Irish small businesses through its renewed partnership with Sage (our report).

The risks acquirers carry

The main exposure is chargebacks. Only the issuer can start one: it returns the disputed transaction to the acquirer and the network moves the funds back automatically. The acquirer can accept the chargeback, taking financial responsibility for the transaction, or contest it with evidence from the merchant. It then recovers the money from the merchant, and if the merchant has gone bust, perhaps after selling flights it can no longer honour, the acquirer absorbs the loss. To limit that exposure, acquirers hold reserves from settlement funds. A rolling reserve withholds a percentage of each day’s sales for a fixed period before releasing it. Acquirers also restrict or charge more for merchant category codes that the schemes treat as high risk, a list Visa calls high-integrity risk categories.

Questions about merchant acquiring

What is an acquirer in payments?

An acquirer is the bank or licensed payment company that contracts with a merchant to accept card payments, sends those payments into the card networks and settles the proceeds to the merchant.

What is the difference between an acquiring bank and a payment processor?

The acquirer holds the merchant contract, the network membership and the liability for losses. The processor provides the technology that carries the transaction data. One company can be both, but a processor without a licence or sponsor cannot settle funds to merchants on its own.

What are fintech acquiring services?

The term usually means acquiring offered by a technology company instead of a traditional bank, often bundled with a gateway, fraud tools and routing. Hotel groups, marketplaces and retailers use them to run payments across many countries through one provider, as Minor Hotels now does with Checkout.com across more than 640 hotels (our report).

Who pays interchange, the merchant or the acquirer?

The acquirer pays interchange to the issuer on every transaction, then recovers it from the merchant through its fees. Interchange-plus pricing itemises that cost; blended pricing folds it into one rate.

Why do acquirers hold back a merchant’s money?

Because the acquirer is liable for chargebacks the merchant cannot pay. A reserve gives it funds to cover refunds and disputes if the merchant stops trading, which is why businesses paid long before delivery are likeliest to face one.