Acquirer
A financial institution that processes credit card payments on behalf of merchants, maintains merchant accounts, and facilitates the settlement of funds from card-issuing banks to merchant bank accounts.
An acquirer (also called an acquiring bank or merchant acquirer) is responsible for onboarding merchants, underwriting risk, and enabling card acceptance. The acquirer holds the merchant account, routes transaction authorization requests through card networks, and receives settlement funds from issuing banks before depositing them into the merchant's business bank account.
Acquirers assume financial liability for the merchants they service, which means they bear the risk if a merchant cannot fulfill chargeback obligations or goes out of business with outstanding liabilities. This liability explains why acquirers conduct thorough underwriting during the merchant application process, evaluating factors such as business type, processing history, chargeback ratios, and financial stability.
Major acquiring banks include Chase Merchant Services, Bank of America Merchant Services, Wells Fargo Merchant Services, and First Data (now Fiserv). Many payment processors partner with multiple acquiring banks to serve different merchant segments and risk categories. Acquirers typically work with Independent Sales Organizations (ISOs) and payment service providers who handle day-to-day merchant support while the acquirer provides the underlying banking infrastructure and assumes regulatory responsibility.
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3D Secure
An authentication protocol for online card transactions that adds an additional verification layer between the cardholder and issuing bank, shifting fraud liability from merchants to card issuers when properly implemented.
ACH Payment
Automated Clearing House payment is an electronic bank-to-bank payment method that transfers funds directly between bank accounts through the ACH network, typically used for direct deposits, bill payments, and recurring transactions.
Address Verification Service (AVS)
A fraud prevention tool that compares the numeric portions of a billing address provided during a transaction against the address registered with the card-issuing bank, returning match result codes to help merchants assess transaction risk.
Aggregator
A payment service provider that enables multiple merchants to process card transactions under a single master merchant account rather than each merchant having their own dedicated merchant account, common with services like Square, Stripe, and PayPal.
Annual Fee
A yearly charge assessed by payment processors for maintaining a merchant account, typically ranging from $50 to $300 or more, billed once per year in addition to other processing fees.