View current credit card rates based on Bankrate.com’s weekly national survey of large banks and thrifts.
Acquiring financial institution
An acquiring financial institution processes credit cards. Bankrate explains.
What is an acquiring financial institution?
An acquiring financial institution, also called an acquirer, is a bank that processes credit or debit card transactions for businesses. A business must have a relationship with an acquiring bank to be able to accept credit card payments.
An acquiring financial institution has a contract with the businesses it processes credit cards for. It deposits the daily transactions into the merchant’s account as well as takes out the credit card processing fees, including interchange and acquirer fees, at the end of the month.
The acquiring financial institution, also called the member bank or merchant bank, acts as a go-between that connects the merchant and the issuing bank, which is the company that issues the credit cards. It is this relationship that allows the verification of each customer transaction.
The acquiring bank takes on all of the risk associated with approving credit card transactions. The acquiring bank either approves or rejects each customer transaction, using information stored in the customer’s account by the credit card issuer. It also handles clearing the accounts and performing any chargebacks.
Looking for a great new credit card with cash-back rewards? Bankrate has you covered.
Acquiring financial institution example
Nash buys a duck at the De Brutus duck store, using his credit card to pay. De Brutus sends a charge to its acquiring financial institution Short Bank, which pings Nash’s bank account and determines he has the funds. Short processes the transaction and credits the De Brutus store that amount at the end of the month, less its processing fees.
More From Bankrate
1 min read Sep 28, 2022
We’ll break down the best cards with welcome offers of 100,000 points or more.6 min read Sep 28, 2022
Data breaches continue to happen. Here’s what you can do if you are a victim.4 min read Sep 28, 2022
The Capital One Quicksilver Cash Rewards offers an unlimited, flat cash back rate.4 min read Sep 28, 2022
Do your research and set attainable goals so you start out on the right foot.5 min read Sep 28, 2022
The credit card approval process can be a relatively speedy, but it may take weeks.5 min read Sep 28, 2022
Sometimes carrying several credit cards makes sense, and other times it may not.6 min read Sep 28, 2022
Find out how to use your credit card and which pitfalls to avoid.3 min read Sep 27, 2022
Generally, having no credit is better than having bad credit, though both can hold you back. Luckily, there’s a way out.6 min read Sep 27, 2022