Issuing Bank And Acquiring Bank

What is an acquiring bank and what is its role in the ecommerce payment process.

Issuing bank and acquiring bank. Understanding the differences between acquiring banks and issuing banks is important for merchants. The services and products these banks provide go beyond this simple explanation but it is useful to view them through this lens. When there is a dispute the issuing bank contacts the acquiring bank to settle the matter. Both conduct specialized kyc know your customer processes to minimize their risk and determine creditworthiness.

An acquiring bank also known simply as an acquirer is a bank or financial institution that processes credit or debit card payments on behalf of a merchant. Many large banks for example issue credit cards and offer deposit accounts as part of their consumer facing personal services issuing and also provide what. Now let s get specific. An acquiring bank the merchant s bank is a financial institution that initiates and maintains contractual agreements with merchants for accepting and processing credit card transactions.

An issuing bank is an important element since it is one of the parties involved in transaction disputes. Furthermore you might also want to know more about its counterpart the issuing bank. An acquiring bank sometimes referred to as acquirer or credit card bank is an institution that has the cards schemes authorization to process a transaction so by signing a contract with the acquirer a merchant can process credit and debit card transactions. The acquiring bank passes the merchant s transactions along to the applicable issuing banks to receive payment.

The acquiring bank also merchant bank or acquirer is the financial institution that maintains the merchant s bank account. Put simply the acquiring bank is the bank on the merchant end of the transaction and the issuing bank is the cardholder or consumer s bank. In short an issuing bank is the credit card holder s bank and the acquiring bank is the merchant or business s bank. These banks issue chargebacks and their reason codes and make the final call in the claim for the chargeback.

The acquiring bank assumes responsibility on behalf of the merchant the issuing bank assumes responsibility on behalf of consumers. The best known credit card associations are visa mastercard discover china unionpay american express diners club japan. The contract with the acquirer enables merchants to process credit and debit card transactions. Banks can and commonly do hold both roles.