An acquirer (or
acquiring bank) is a member of a card scheme(s), for example MasterCardand/or Visa, which maintains merchant relationships and receives all bankcard transactions from the merchant.
Acquirers charge the merchants fees which include: a monthly rent for the
EFTPOSterminal (if it is not owned by the merchant) which is usually equivalent to around 10 to 30 USD monthly, a percentage fee on their transactions (which varies from country to country, for example in Poland it ranges from 1.8% to 2.5%, regardless of whether the card is debit or credit, in USA and many Western Europe countries the fee is often much lower for debit cardtransactions, than for those with credit cards), and sometimes--especially in the countries where fees for debit cardtransactions are much lower--an additional fixed fee per transaction, which ranges from 10 to 20 cents).
In the USA, Visa/MasterCard acquirers, and therefore merchants, usually pay much less for a successfully swiped credit card than for a hand-keyed transaction (where the card is not present). Debit transaction costs are usually just a flat rate (usually $.60 to $1.10 USD each) when the PIN is entered by the cardholder. The merchant's terminal requires a PIN-pad for this PIN entry. Often the PINpad is a separate device connected to the terminal, other times the PINpad is integrated in the machine.
When a debit card is swiped, but the PIN is not entered, the acquirer usually charges a rate comparable to the swiped credit card rate or less. Since Visa/MC charges acquires less for non-PIN debit cards, many acquirers charge less to the merchant. Typical rates are usually around 1.3% to 1.9% for non-PIN debits (offline Debit rate) and often 1.6% to 1.9% for credit card swipes.
These swiped transactions are usually referred to as Qualified transactions. It is important to note that many Rewards-type Visa/MC cards, even when swiped, will fall into the Mid-Qualified or even the Non-Qualified category.
Handkeyed transactions usually have a much higher rate, often 2.3% to 2.8% for these transactions. Many processors will charge the lower rate on all transactions on their monthly merchant statements, then show the "add on" for the handkeyed and other more costly transactions. Often this 'add on' is 1-1.3%. These transactions are often referred to as Mid-Qualified.
The highest rate (Non-Qualified transactions) is for corporate cards, foreign cards, downgraded transactions (when the merchant does not meet all of the requirements), and higher-level Rewards-type cards. This Non-Qual rate is typically at least 3.0%, and sometimes as high as 5.0%
The Visa/MasterCard acquirer is the entity that is contacted for each authorization request, and then the entity that provides the approval or decline of the credit card. Processing networks are utilized for these communications, usually behind the scenes, called front-end processing networks. The back-end processor is the one that actually settles the funds into the merchant's bank account, and then prints the monthly merchant statement.
Whether a "swipe" terminal is used, or a POS device, or even an internet payment gateway (e.g., Authorize.Net, BluePay 2.0), it is the acquirer that approves and settles the transactions.
Royal Bank of Scotland
Bank of America
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