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What is an acquiring bank?

ac - quir - ing bank
noun

An acquiring bank is a financial institution responsible for accepting debit or credit card transactions made by cardholders.

Acquiring banks, also known as acquirers, hold membership within card networks like Mastercard, Visa, Disocver and American Express. They undertake the role of processing transactions on behalf of merchants within these debit and credit card networks. This connection between acquirers and card networks allows for the verification of customer transactions by linking acquiring banks to the banks that issue credit cards, known as issuing banks. This validation process occurs when a cardholder uses their debit or credit card for a purchase. The acquiring bank evaluates the transaction and either approves or declines it based on the information stored by the card network and issuing bank about the cardholder's account.

Beyond managing the complete range of transactions carried out by cardholders using their credit or debit cards, an acquirer also bears the entire risk and responsibility connected to the transactions it handles. Consequently, the acquirer applies various charges for its services. These fees can differ among acquirers but are typically levied on a regular basis for activities including transactions, refunds, chargebacks and various other scenarios. These fees encompass charges imposed on behalf of the acquirer itself, the card network and the issuing bank.