Acquiring Bank — Where the Money Comes From

An acquiring bank is named for the role it plays in credit card processing. Acquiring banks accept or ‘acquire’ credit card transactions from banks that issue credit cards to consumers, called issuing banks.

An acquiring bank maintains a merchant account for each business it services. A merchant account is an open line of credit that allows the acquiring bank to accept transactions on behalf of a business and deposit funds from sales into the business’ deposit account (typically a checking account).

Acquiring banks assume the risk associated with the transactions they process. If a business becomes insolvent and unable to fund a reversal, refund, or chargeback, the business’ acquiring bank must provide the funds to make every cardholder whole.

Examples of large acquiring banks include Wells Fargo, HSBC, Chase, and Bank of America. We have also included a Visa’s posted list of acquiring banks in the resource section below.

What’s the difference between an acquiring bank and a credit card processor?

The term credit card processor literally refers to a company that submits bankcard transaction information to a card association computer network (Visa, MasterCard, etc.) where it is then routed among acquiring and issuing banks.

An acquiring bank supplies the financial backing to support the risk of merchant processing and to fund merchants for sales.

For example, a company that is licensed by a registered member of a card association may process its own transactions, and in effect be a credit card processor, but it is not an acquiring bank.

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