What is "acquiring?

Acquiring, in the context of payments, refers to the process a business uses to accept credit or debit card payments from customers. It involves a relationship with a financial institution known as an Acquiring Bank or merchant acquirer. This bank processes the card payments on behalf of the business.

Here's a breakdown of key aspects of acquiring:

• Merchant Account: Businesses need to establish a Merchant Account with an acquiring bank. This account acts as a holding place for funds collected from card payments before they are transferred to the business's regular bank account.

• Payment Gateway: For online transactions, a Payment Gateway is essential. This acts as a secure conduit, transmitting card information from the customer's browser to the acquiring bank for authorization.

• Point of Sale (POS) Systems: For brick-and-mortar stores, Point%20of%20Sale%20(POS)%20Systems are used. These systems include hardware (like card readers) and software to process transactions.

• Authorization: The acquiring bank verifies the cardholder's information, checks for sufficient funds, and authorizes the transaction. This involves communication with the issuing bank (the bank that issued the customer's card).

• Settlement: Once authorized, the funds are transferred from the cardholder's issuing bank to the acquiring bank and then deposited into the merchant's account. This process is known as Settlement.

• Fees: Acquiring banks charge fees for their services. These can include transaction fees, monthly fees, chargeback fees, and other charges. These fees will affect the merchant's profit%20margin

• Compliance: Merchants must comply with Payment Card Industry Data Security Standard (PCI%20DSS) standards to ensure the security of cardholder data.

In essence, acquiring is a critical component of modern commerce, enabling businesses to accept card payments efficiently and securely.