When it comes to merchant sales and acquiring, terminology related to payments often causes some confusion. Merchant acquirers and payment processors are not the same thing even though some people use them synonymously. Understanding the difference will facilitate a smoother business process for sales of products and services overall.

How to Become a Merchant Acquirer

Professionals use three terms to indicate the same function: merchant acquirer, acquirer, and acquiring bank. As the last one indicates, a merchant acquirer is a financial institution like a bank that handles sales deposits and can process refunds.

In order to know how to become a merchant acquirer, a bank needs an established relationship with the major credit card companies like Visa, MasterCard, and Discover. They do not process the payments directly but do lend an important benefit to the entire merchant sales and acquiring process. After all, the many needs somewhere to go after a customer or client pays.

Through the card network relationships, merchant acquirers take on a considerable part of the responsibility for accepting payments. These banks uphold all regulatory requirements and rules for financial institutions and the credit card companies they work with. When they become a payment facilitator, they also engage in underwriting and oversight of the merchants connected to them through the payment acquisition process.

A merchant services independent sales agent works to connect sales companies with merchant acquirers and payment processors to facilitate the function of their business. They can help explain the differences between each and find ones that work for specific needs. Payment processing facilitators may even remove more of the complexity than that. First, understand what a payment processor is.

What Is a Payment Processor?

This term seems more straightforward as it describes the exact action taken by the financial entity. A payment processor maintains the technological infrastructure, connections, and security to process all payments swiftly and safely between businesses and consumers. They become a payment facilitator by handling the authorization of transactions and transfer of money between individuals, commercial entities, and banks.

Examples include credit card companies and online platforms that allow members to have accounts like PayPal and Stripe. These payment processors provide both merchant acquirer and payment processor services because they handle both the technical order management and the receipt of money sides of the payment equation. Larger brick-and-mortar banks also offer these types of things to smooth the process for their larger clients. Firms that do both are often referred to as merchant acquirers even though they are also payment processors, too.

When companies use a payment facilitator, they do not need to establish relationships with merchant acquirers or payment processors directly. This simplifies the entire thing and may reduce the risk of ever or security breaches because the payment funds go through fewer processes. A payment facilitator handles both sides of the transaction so the merchant enjoys a hands-off relationship with long list of credit card companies and banks. Choosing one of these services creates a highly efficient payment processing system for digital and real-world sales.