20 Concept And Role Of The Acquiring Bank In Payment Processing
Generally, most businesses accept credit card payments from their consumers. However, as a business owner, if you are unaware of what goes into processing card transactions, you might find yourself in a bind.
The acquiring bank is one of the essential players in the payment network, and it is responsible for the smooth authorisation and processing of digital payments. Read on to find out more.
What Is An Acquiring Bank?
The financial institution in charge of processing credit and debit card payments on behalf of the merchant is known as an acquiring bank. When a cardholder uses his card to make a purchase, the acquiring bank is in charge of authorizing or refusing the transaction based on information from the issuing bank and the card network.
You must first sign a contract with a financial institution that will build and maintain your merchant account before you can begin accepting online payments on your website. This is critical because, without it, you will be unable to process credit and debit card transactions, as well as receive payments after they have been completed. The funds will be placed into the merchant’s account if the purchase or payment is accepted.
How Does The Acquirer Take Part In Payment Processing?
- When a customer arrives at the checkout to complete his purchase, a payment gateway initiates the transaction process by obtaining transaction authorisation and data encryption to ensure the safe transmission of data over the internet.
- After the gateway has started the process, the acquiring bank collects transaction data from the merchant and sends it to the card association.
- By certifying that the card is legitimate and has adequate funds, the card association and the issuing bank authenticate this information and establish the transaction’s validity.
- The card association and the issuing bank provide approval to the acquiring bank to credit the money to the merchant once the transaction has been approved. The transfer of funds across accounts takes place regularly.
What To Look Out For In An Acquirer
If you’re in the market for a merchant acquirer and are ready to accept payments, you should definitely do so. However, ensure that your acquirer provides these options:
- Whether your payment processor PCI is compliant. This adds an extra degree of protection to your transactions.
- Does your acquirer provide a multi-currency merchant account?
- How do you cover the costs of your payment acceptance requirements? Whether you are charged a transaction rate for each transaction, or will you be charged a monthly fixed cost.
- What currencies will your firm be able to accept?
- Whether you will be able to access your assets and obtain an immediate settlement.
- Does your acquirer provide access to customer service 24/7?
Acquiring banks are equipped with specific terminals to serve and conduct a wide range of financial transactions. Every business needs to ensure that they are dealing with the correct payment processor for their needs.
A reputable and professional processor will offer you the information, tools, and support you need to accept card payments safely. Using OpenPayd helps secure transactions, implementing the necessary procedures at every stage. Get in touch with us to learn more!