In the process of processing payments, two banks are obligatory participants – the issuer and the acquirer. The
payment scheme of an online store is quite complicated, and if you are planning to start selling goods or services
on the Internet, it is important to know the difference between issuer vs acquirer. In this article, we will explain
what an issuing bank and an acquiring bank are and how they interact with each other when processing transactions.
Every online merchant must have a bank account to accept payments. This is the so-called merchant account. The bank
in which it opens an account is called the acquirer. Acquiring services are provided by financial institutions as
part of the payment process when the seller accepts payments from a bank card – that’s the meaning of the merchant
The acquirer acts as an intermediary for transactions for debit and credit cards. It collects and processes
information on card payments on behalf of the merchant. The acquirer also has the role of ensuring the security of
the financial transaction. Transactions themselves carry risks, such as:
To prevent such problems, acquirers work in accordance with PCI DSS standards.
An issuing bank is a financial institution that issues a bank card on behalf of global payment systems, such as Visa
or MasterCard. An issuer is a bank that directly serves the buyer of goods or services in an online store. Its main
There are over 100,000 banks that can issue cards from global payment operators.
After the buyer submits an application for payment for a product or service, it goes to the card issuing bank. The
financial institution authenticates the client. It also checks the balance of funds in the account.
Issuers also face significant risks. They take responsibility and guarantee payment in case of loss of a bank card.
There are also other risks:
The payment process itself is quite complicated. It includes four main steps. We’ll consider them below.
The first stage is the direct ordering of goods or services. The client chooses everything they need and adds
it to the cart. After that, they submit a request and specify payment information in a special payment form.
Its content may differ, but to pay with a bank card, you must usually specify the card number, expiration
date, and CVV code. Also, the application automatically adds the account number to which the payment will be
made and the amount to be paid.
At the authorization stage, the identity of the client must be confirmed.
After the client has indicated all the necessary information, it goes to the acquiring bank. In turn, the
acquirer sends two requests:
If this phase completes successfully, transaction processing proceeds to the authentication phase.
At this stage, the issuer must verify that the specified card exists and is valid. The issuer must either
approve the financial transaction or reject it and state the reason for the refusal. If the transaction is
approved, the authentication is completed, and the bank blocks the necessary amount on the buyer’s account
for the financial transaction.
At the end of the business day, the merchant sends the approved authorizations to the acquiring bank, which,
in turn, sends this information to the credit card network for settlement. The card network confirms
readiness, and then the issuing bank sends the funds to the acquiring bank. After receiving the funds, the
acquirer credits the money to the seller. In turn, the issuer places information about the financial
transaction in the buyer’s payment report.
Acquiring banks and issuing banks are the main participants in transaction processing. The issuer is directly responsible for issuing credit and debit cards to customers, while the acquirer ensures that payments are processed and credited to the merchant’s account. Sometimes, one bank can act as an issuer and acquirer. This is possible if the seller’s merchant account and the client’s bank card are opened in the same financial institution. The key differences between issuers and acquirers are as follows:
The issuing bank and the acquiring bank are the main participants in the payment process. The issuer is the bank that issued the card with which the payment is made. This financial institution acts on the side of the buyer. An acquirer is a bank in which a merchant account is opened. This financial institution acts on the side of the seller. Both banks are responsible for their customers and ensure the security of payments. The same bank can act as both an issuer and an acquirer if both the buyer and the seller use its services.