The world of electronic payments can be complex, with many different players involved in its processes. Among these players are acquirers, issuers, and merchants, each of them with a specific role to play in the payments ecosystem.
Other important players in the payments scene include payment processors, payment gateways, and payment networks. Together, these actors enable individuals and businesses to accept and process electronic payments, making commerce more convenient and accessible for everyone.
Throughout this article, we will discuss these actors, who they are, their differences, and their relationship to payments.
What is an acquirer?
An acquirer, also known as an acquiring bank, is a financial institution that enables merchants to accept electronic payments from customers. When a customer makes a payment using a credit or debit card, the acquirer processes the transaction, verifies the card details, and ensures that the payment is authorised. The acquirer is responsible for settling the payment with the issuer (more on this later) and transferring the funds to the merchant’s account.
In simple terms, an acquirer acts as the bridge between the merchant and the payment network, ensuring that electronic payments are processed smoothly and securely. Without acquirers, merchants would not be able to accept electronic payments and would be limited to cash transactions only.
What is an issuer?
An issuer is a financial institution that issues credit and debit cards to consumers. When a customer applies for a credit or debit card, the issuer verifies the customer’s creditworthiness and approves or denies the application. Once approved, the issuer issues the card to the customer and sets a credit limit (in the case of a credit card) or links the card to the customer’s bank account (in the case of a debit card).
When a customer makes a payment using their card, the issuer is responsible for authorising the payment and ensuring that the customer has sufficient funds or credit available to cover the transaction. The issuer also processes chargebacks and disputes on behalf of the customer.
What is a merchant?
A merchant is a business that sells goods or services to customers. When a customer makes a purchase from a merchant, they have the option to pay using cash, check, or electronic payment methods such as credit or debit cards. They are required to adhere to various regulations and standards to ensure the safety and security of their customers.
What is the difference between acquirers, issuers, and merchants?
The main difference between acquirers, issuers, and merchants is their role in the payments ecosystem. Acquirers enable merchants to accept electronic payments from customers, issuers issue credit and debit cards to consumers, and merchants sell goods and services to customers. Each player has a specific role to play, and without any one of these players, the payments ecosystem would not function as freely.
Another important difference is the relationships that these players have with each other. Merchants have a direct relationship with acquirers, who process their electronic payments and transfer funds to their bank account. Issuers, on the other hand, have a direct relationship with cardholders, who use their credit and debit cards to make purchases. Acquirers and issuers, in turn, have a relationship with each other, as the acquirer must settle the payments with the issuer and transfer funds to their account.
How do acquirers, issuers, and merchants work together?
Acquirers enable merchants to accept electronic payments from customers, issuers issue credit and debit cards to consumers, and merchants sell goods and services to customers.
When a customer makes a payment using a credit or debit card, the merchant sends the payment details to the acquirer, who processes the transaction and verifies the card details.
The acquirer then sends the payment details to the issuer, who authorises the payment and ensures that the customer has sufficient funds or credit available to cover the transaction.
How can Trust Payments fit into the payments process?
Our TRU Acquiring offering is your one-stop shop for payments – we can offer many of the same services as banks, as well as process payments from any of your sales channels. We provide a merchant account and payment platform all through one integration, helping you avoid additional costs and complexity.
Whether you have questions or are ready to move forward, let’s talk! For advice, assistance, or just a friendly chat, we are here to help.