What is an Acquiring Bank?
An acquiring bank (or acquirer) is a financial institution that processes credit and debit card transactions on behalf of a merchant. It connects the merchant to the card networks, handles authorisation requests, and deposits funds into the merchant's account after settlement.
How Acquiring Banks Work
When a customer pays by card, the acquiring bank acts as the merchant's representative in the transaction. It receives the payment details, routes them through the card network (Visa, Mastercard, etc.) to the issuing bank, and processes the response — either approving or declining the transaction.
The acquiring bank also handles settlement, transferring the funds (minus fees) from the card network to the merchant's bank account, typically within 1-3 business days.
Acquirer vs Issuer
The acquiring bank works for the merchant. The issuing bank works for the cardholder. Every card transaction involves both:
- Acquiring bank: Processes the payment for the merchant, ensures PCI compliance, manages chargebacks
- Issuing bank: Issued the card to the customer, approves or declines transactions, manages the cardholder's account
What Acquirers Charge
Acquiring banks charge merchants several fees:
- Merchant service charge (MSC): A percentage of each transaction, typically 0.5-3%
- Transaction fees: A fixed per-transaction charge
- Monthly fees: Account maintenance and PCI compliance fees
- Chargeback fees: Charged when a customer disputes a transaction
Acquirers and PCI DSS
Acquiring banks are responsible for ensuring their merchants comply with PCI DSS. They may impose fines on merchants who fail to maintain compliance or who suffer data breaches. This is why many merchants use payment solutions that reduce their PCI scope — it satisfies the acquirer's requirements while minimising the merchant's compliance burden.
Paytia integrates with all major UK acquiring banks including Lloyds Cardnet, Barclaycard, and Worldpay. When a phone payment is processed through Paytia's DTMF suppression platform, the transaction is routed to the merchant's acquiring bank through their existing payment gateway. Paytia handles the PCI compliance layer, which satisfies the acquirer's security requirements.
Frequently Asked Questions
What is the difference between an acquiring bank and a payment processor?
An acquiring bank is a licensed financial institution that holds the merchant's account and takes on financial risk. A payment processor is a technology company that handles the technical processing of transactions on behalf of the acquirer. Some companies, like Worldpay, act as both.
Can I choose my own acquiring bank?
Yes. Merchants can choose their acquiring bank based on fees, contract terms, and supported card types. Many businesses compare acquiring bank rates to find the best deal for their transaction volume and average transaction value.
What happens if my acquiring bank drops me?
If an acquiring bank terminates your merchant account — often due to excessive chargebacks or PCI non-compliance — you will need to find a new acquirer. This can be difficult as the termination is recorded on the MATCH list, which other acquirers check before onboarding new merchants.
See how Paytia handles acquiring bank
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