Acquirer vs Issuer: Understanding the difference

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Anthea Taylor
February 9, 2023
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Acquirer vs Issuer: Understanding the difference

Acquirer vs Issuer: Understanding the difference

There are many parties involved in the payments chain. As a merchant, you need to be familiar with all of them. Only by knowing who’s responsible for what steps, can you ensure your payments are optimized and running as smoothly and efficiently as possible. So, what is the difference between an acquirer and issuer?

What’s the difference between an acquiring bank and an issuing bank?

No matter what kind of business you are, if you want to accept debit and credit card payments online, you’ll work with both acquirers and issuers.


Also known as a merchant acquirer or acquiring bank, this is the financial institution that handles your merchant account so you can accept credit or debit cards.

Essentially, it’s the bank that settles card transactions into your account.

In some cases, the payment processor and the acquirer are one and the same.

Importantly, the acquirer must be licensed by financial regulators.

Card schemes and businesses work with an acquirer to process payments in exchange for a fee.


Sometimes called the issuing bank, this is the customer facing part of the payment chain and is the bank that issues the credit or debit card.

Issuing banks are members of the card scheme, such as Visa and Mastercard, but they can also operate as both issuer and card scheme as in the case of Amex.

Cardholders look to their card issuer to set credit limits, offer benefits, charge interest and fees, replace lost or stolen cards, and resolve disputes.

The role of the acquirer

Basically, the acquirer looks after the merchant’s interests in the processing of a card or customer not present transaction. This includes:

  • Merchant Accounts: Your acquirer will offer and maintain your merchant account, setting rules and requirements and recording and maintaining account activity e.g. deposits and withdrawals.
  • Authorization requests: When a customer pays by card, the acquirer receives the information from the card issuer and then forwards any authorization requests.
  • Settlement: When the transaction is cleared and processed, the acquirer receives the funds, pays the card issuer the associated interchange fee and deposits the remaining funds into your account.

The role of the issuer

The issuer facilitates card payments and looks after the interests of the cardholder, your customer, by:

  • Issuing cards: As their name suggests, an issuer handles card applications and issues users with a payment card.
  • Running accounts: They also offer and maintain the debit or credit accounts, setting card spend limits, recording transactions, issuing statements, taking repayments and monitoring for fraud.
  • Card authorization: Issuers manage the ID and security processes and authenticate transactions, receiving and sending data to the relevant card schemes and payment gateways to approve or decline cardholder transactions.
  • Releasing funds: Once a transaction is approved, the issuer releases the funds to the merchant’s acquiring bank.
  • Rewards: Many issuers also allow consumers to earn loyalty points or cashback from purchases made with payment cards.

What happens in a chargeback scenario?

Issuers and acquirers also play the principal roles in managing chargebacks, which are becoming an increasing issue for online merchants. And in times of economic downturn, they see a big rise in chargebacks, some of which are driven by friendly fraud.

In fact, chargebacks have been estimated to cost retailers 0.47% of their total revenue annually. And 90% of merchants say that cardholder abuse of the chargeback process is a leading concern for their business.

Issuers and acquirers are central to managing the chargeback process and act as the main intermediaries on behalf of your business and the customer, helping determine whether a chargeback is legitimate.

Handling chargebacks? In the event of a customer dispute (e.g. if an item hasn’t arrived, is damaged or has been charged twice):

The issuer initiates the chargeback process at the cardholder’s request. It also reviews chargeback responses and assigns liability so that the dispute can be resolved.

The merchant acquirer will receive a chargeback notice from the card issuer.It reviews the issue and forwards chargeback responses. If the chargeback is legitimate, it debits the necessary amount from the merchant's account, back to the issuer who then credits the cardholder’s account.

What role does play? is an acquirer additionally offering payment gateways services, payment processing and domestic and international acquiring all rolled into one. can, therefore offer an end-to-end solution to businesses. offers a full stack payments solution. This solution can scale with your business needs and is built for speed. This is supported by local expert teams in all major markets.

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February 9, 2023 10:40
February 9, 2023 10:40