Infrastructure
Acquirer
Definition
Acquirer a bank or financial institution licensed by card networks to process card transactions on behalf of merchants. Also called acquiring bank or merchant acquirer. The acquirer provides the merchant account, assumes liability for merchant behavior, manages settlements, and handles chargebacks. Major acquirers include Worldpay, First Data (Fiserv), Chase Paymentech, and Elavon. Different acquirers have different risk appetites for merchant verticals.
Related Terms
Issuer
The bank or financial institution that issues payment cards to consumers and maintains the cardholder relationship. Also called issuing bank. The issuer receives interchange fees, handles cardholder disputes, makes authorization decisions, and bears fraud risk on the cardholder side. Major issuers include Chase, Bank of America, Capital One, and Barclays.
Merchant Account
A bank account that enables a business to accept card payments. The merchant account holds funds from card transactions before settlement to the merchant's business bank account. Obtaining a merchant account requires underwriting by an acquirer. High-risk merchants face more scrutiny and may require specialized acquirers. Terms include processing limits, reserve requirements, and fee structures.
Payment Processor
A company that handles the technical aspects of processing card transactions, including routing authorizations, managing connections to card networks, and facilitating settlement. Some processors are also acquirers; others process on behalf of acquirers. The processor handles the technical plumbing while the acquirer handles the banking relationship and merchant underwriting.
Payment Facilitator (PayFac)
A payment model where a master merchant (the PayFac) aggregates sub-merchants under its own merchant account. PayFacs like Stripe, Square, and PayPal perform underwriting, onboarding, and risk management on behalf of their acquirers. This enables fast merchant onboarding but means sub-merchants don't have their own MIDs. PayFac model works well for smaller merchants but creates single-point-of-failure risk.
See Also
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