HOW IS AN ACQUIRER BANK DIFFERENT FROM ISSUING BANK?

When it comes to business processing procedures, there are a lot of technical terminologies involved. Talking about banking for your business, you must have already heard about acquirers and issuers. Most of the people get confused between these two categories of banking entities. These two bank types are very important in the merchant processing aspect. If you’re a merchant who runs a business that involved card processing, you must definitely educate about the acquirer bank and issuing bank and more importantly the differences between both.

What is the difference between Issuing bank and Acquirer bank?

Basically, both the issuing bank and acquirer bank are very important for a merchant to conduct their business which involves card processing. But it’s very important to know the difference between these two, so that you can act accordingly.

• Acquirer Bank: For a merchant, most of the work is connected to this bank type. An acquirer bank is a financial entity that maintains and processes the merchant’s bank account. The contract between a merchant and an acquirer bank allows the merchant to process debit card and credit card transactions. The acquirer bank processes the transactions of merchant and transfers them over to the acquirer bank in order to receive payments.
• Issuing Bank: A financial institution which issues credit cards and debit cards to the consumers along with the card networks such as MasterCard, Visa, and many more. The issuing bank is the middleman here, dealing business between the consumer and card network.

Additionally, a processor is a firm that is connected to the acquirer for the credit card transaction processing. MID is a serial number issued by the acquirer to a merchant, and it is used to identify and verify the merchant’s account while transaction processing.