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Credit Card Acquirers vs Credit Card Issuers: The Differences

Credit Card Acquirer vs Issuer - What’s the Difference
Jason Steele
Jason SteeleUpdated December 16, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Whenever you swipe, tap, or dip your credit card to make a purchase, you initiate a complex chain of events that results in the digital movement of money. There are many players involved in this process, but two of the most important are the acquiring bank and issuing bank. What’s the difference?Put simply, the acquiring bank is on the merchant’s end of the transaction, while the issuer represents your side of the deal. Both acquirers and issuers work with a credit card network (like Visa or Mastercard) to ensure that credit card payments go smoothly.Here’s a closer look at credit card acquirers vs. issuers and why it’s important to understand the difference.

What Is a Credit Card Acquirer?

A credit card acquirer is a financial institution that represents the merchant in a credit card transaction. Generally, in order to accept credit card payments — and “acquire” funds from the cardholder’s bank — a business needs to set up a merchant account with an acquiring bank. This bank then processes credit card payments on the merchant’s behalf. When you utilize a credit card to make a payment, the acquiring bank submits it to the card network (such as Visa or Mastercard). The network, in turn, forwards it to whichever bank issued your card. Once your issuing bank releases the payment amount, the acquiring bank accepts the payment and makes sure the money gets to the merchant’s account.Because acquirers assume some of the financial risk associated with credit card payments, they will typically be careful in vetting any business applying for a merchant account.

What Is a Credit Card Issuer?

Credit card issuers are financial institutions that issue credit cards to consumers. If you have a credit card, this is the company you interact with when checking your card balance, paying your bill, or reporting a missing card. Credit card issuers also set interest rates, credit card fees, and benefits. In addition, they determine how much credit to extend to you and have the final decision on whether a transaction you make is approved or denied.Whenever you use your credit card to make a payment, you are authorizing your credit card issuer to pay the merchant on your behalf. When they make the payment, you are essentially borrowing money from the card issuer. If you pay your credit card bill in full by the payment due date, however, you don’t pay any interest on this loan. If you only pay the minimum amount, you will pay interest on any leftover balance. How much will depend on the card issuer, which is why it can be wise to shop around and compare credit card rates before deciding on a credit card issuer. Some large banks issue credit cards and also offer merchant accounts. As a result, they can serve as both an issuer and an acquirer at the same time. By the same token, some credit card networks (like American Express and Discover) serve as both the credit card network and the issuing bank for their cardholders. Recommended: How to Choose a Credit Card 

Credit Card Acquirer vs Issuer: Key Differences

There are some key differences between a credit card acquirer and credit card issuer. One of the biggest is that the issuer represents the cardholder, while the acquirer represents the merchant. Acquirers authorize and process transactions but rely on issuers to validate credit cards and issue payments.While both acquirers and issuers work with credit card networks (like Visa or Mastercard), they do so in different ways. Issuers enable you to make payments through their relationships with the card networks, while acquirers allow merchants to accept payments through the card networks. Here’s a closer look at how acquirers and issuers compare.
Credit Card IssuerCredit Card Acquirer
Provides credit cards to consumersMaintains the merchant’s bank account
Approves or denies credit card applicationsProcesses payments
Authorizes or denies payment for a transactionEnables the merchant to receive payments
Releases payment to the acquiring banks once approvedGives merchant a line of credit to offset unexpected processing costs
Enables customers to make payments through card networksAllows merchants to accept payments through card networks

How Credit Card Acquirers and Issuers Impact Payment Processing

Acquirers and issuers work together to process credit card payments. Here’s how:When you make a purchase with your credit card, the data from that transaction goes to the merchant’s acquiring bank. The acquiring bank then submits the transaction to the card network, such as Visa or Mastercard. Next, the card network forwards the transaction to your credit card issuer. Your issuer makes sure that you have enough available credit to cover the cost of the transaction. If you do, the issuer will authorize the transaction and release the funds on your behalf. These funds get transmitted to the card network, which sends the money — minus a credit card process fee — to the merchant’s acquiring bank. While this may sound like a time-consuming process, it all happens virtually instantaneously. Recommended: How Do Credit Cards Work?

Can You Contact a Card Acquirer About a Charge?

If a credit card transaction goes awry (say you pay for an item online but never receive it or get over-charged for a purchase), you’ll first want to contact the merchant. If the merchant is not reachable or refuses to resolve the problem, your next step is to reach out to your card issuer to file a dispute, also known as a chargeback. The issuer will typically refund your payment temporarily. Next, the issuer, credit card network, and the merchant’s acquiring bank will typically look over the charge to determine its legitimacy, as well as the best course of action. Ultimately the credit card network determines the outcome. If you win the dispute, the temporary credit you received will remain on your account. If it’s decided the dispute is not valid, the purchase will be reinstated on your account.

The Takeaway

A credit card acquirer provides merchant accounts to businesses and is authorized to process credit card payments on their behalf. Credit card issuers, on the other hand, provide credit cards to consumers and are authorized to make payments on the customers’ behalf.A simple way to understand the difference? Think of the credit card issuer as representing the cardholder in a transaction and the credit card acquirer as representing the merchant in that transaction. As a consumer, you will likely only interact with credit card issuers, since these are the banks that accept credit card applications, determine credit limits, issue credit card statements, and negotiate (and tell you the outcome) of any disputes.If you’re in the market for a new credit card and not which issuer to choose, Lantern by SoFi can help. With our online credit card marketplace, it’s easy to compare multiple credit card offers (including no-fee, rewards, and credit-building cards) matched to your needs and qualifications all in one place.

Frequently Asked Questions

Can a bank be both a credit card issuer and a credit card acquirer?
What is the difference between a credit card payment gateway and a credit card acquirer?
Can credit card transactions be processed without a credit card acquirer?
Photo credit: iStock/PeopleImages

About the Author

Jason Steele

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
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