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Acquirer: Wikis


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An acquirer (or acquiring bank) is a member of a Card Association, for example MasterCard and/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 EFTPOS terminal (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 card transactions, than for those with credit cards), and sometimes--especially in the countries where fees for debit card transactions 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 transaction in which the magnetic stripe on the reverse of the card has been successfully swiped through the magnetic stripe reader found in a credit card terminal. This is due to the inclusion of the information encoded into the stripe, which includes anti-fraud features. The fees for card transactions that are hand-keyed into the keypad of a card terminal or computer keyboard are higher, since this security information is absent from the transaction data.

Debit transaction costs are usually just a flat rate (usually $.60 to $1.10 USD each) when the Personal Identitification Number (PIN) is entered by the cardholder. This type of transaction is referred to as "PIN debit." The merchant's terminal requires a PIN pad for this PIN entry. Often the PIN pad is a separate device connected to the terminal, other times the PIN pad is integrated in the machine.

When a debit card is swiped through the magnetic stripe reader of a credit card terminal, 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. This type of debit transactions is referred to as "signature debit."

When properly handled by the merchant, these swiped transactions will qualify for the lowest available Interchange program from the card associations. This indicates all of the required criteria have been satisfied by the transaction to "qualify" for that program rate. For this reason, they are often referred to as "Qualified" transactions.

"Rewards" cards from the Associations--cards that provide the cardholder some premium for its use, such as air miles--even when swiped, often into the more expensive "Mid-Qualified" or even the most expensive "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%

In a credit card transaction, the acquirer is the entity that receives an authorization request from its merchant accepting the card as a form of payment and forwards it through various "authorization networks" to the Issuing Bank ("Issuer"). The Issuer determines whether to approve or decline the sale, since they are the entity actually extending credit to its cardholder.


See also



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