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Home > Merchant Acquirer vs Payment Processor: The Similarities and the Differences

Merchant Acquirer vs Payment Processor: The Similarities and the Differences


In the world of electronic payments, two crucial players emerge: the Merchant Acquirer and the Payment Processor. However, most merchants get confused with each other due to the very close nature of their work. These entities play integral roles in ensuring smooth and secure payment transactions, but they are distinct in their functions and responsibilities. In this blog post, we will explore the similarities and differences between Merchant Acquirers and Payment Processors, shedding light on their essential roles in the payments ecosystem.

What is a Merchant Acquirer?

A Merchant Acquirer is like the bridge between the e-store or business where you shop and the bank that handles their money. They help set up merchant accounts, offer support to the e-stores, and make sure everything follows the rules. Think of them as the helper for businesses when it comes to receiving your payments.

What is a Payment Processor?

On the other hand, Payment Processors are like the traffic cops for your payments. They decide if your card or online payment should go through or not. They check if you have enough money, if your card is real, and if there's any suspicious stuff happening. They're the ones who make sure your payment reaches the right place. So, the best payment processor is your payment's best friend!

Similarities Between Merchant Acquirer and Payment Processor

To understand the unique functions of Merchant Acquirers and Payment Processors, it's essential to first recognize their commonalities. These similarities form the foundation of their cooperation in processing electronic payments.




1. Electronic Payment Processing

Both entities are involved in facilitating electronic payments. They are key players in the payments ecosystem, working together to ensure transactions are completed securely and efficiently.

2. Risk Management

Merchant Acquirers and Payment Processors share responsibility for managing various forms of payment-related risks, including fraud prevention, chargebacks, and compliance with industry standards and regulations.

3. Settlement of Funds

Both parties collaborate to settle funds from the customer's bank to the merchant's account. This involves ensuring that funds are appropriately transferred and reconciled.

4. Technical Integration

Merchant Acquirers and Payment Processors require technical integration to work seamlessly together. This integration enables the exchange of transaction data and communication between the two entities.

5. Supporting Multiple Payment Methods

They support a wide range of payment methods, including credit cards, debit cards, mobile payments, and more, to cater to the diverse needs of customers and merchants.

Differences Between Merchant Acquirer and Payment Processor

While Merchant Acquirers and Payment Processors share common ground, their roles diverge in significant ways, reflecting their specialized functions within the payment processing landscape.




1. Client Interaction

Merchant Acquirers primarily interact with merchants (sellers) and establish relationships with them. They handle merchant accounts, onboarding, and provide customer support. Payment Processors, on the other hand, interact directly with customers (buyers) and handle payment transactions.

2. Payment Authorization

Payment Processors are responsible for authorizing and declining payment transactions based on various factors, such as available funds, card validity, and fraud detection. Merchant Acquirers don't typically have a direct role in this process.

3. Fee Structure

Merchant Acquirers earn revenue through fees charged to merchants for their services, which may include setup fees, monthly fees, and transaction fees. Payment Processors also charge fees, but they primarily earn revenue from transaction processing fees.

4. Underwriting and Risk Assessment

Merchant Acquirers engage in underwriting processes to assess the risk associated with a merchant's business. They determine whether to approve or decline a merchant account. Payment Processors perform risk assessment for each individual transaction, focusing on the payment itself.

5. Industry Regulations

Merchant Acquirers are subject to specific industry regulations, which vary by region and card network. They must ensure that their merchant clients comply with these regulations. Payment Processors must adhere to payment card industry (PCI) standards and regulations, ensuring secure handling of payment data.

6. Customer Service

Merchant Acquirers offer customer support to merchants, assisting with account setup, technical issues, and general inquiries. Payment Processors focus on customer support for cardholders, addressing issues related to transactions, billing, and disputes.

7. Settlement of Funds

Payment Processors are responsible for ensuring that funds are transferred from the customer's bank to the merchant's account promptly. They also handle the distribution of funds across multiple merchants. Merchant Acquirers, on the other hand, primarily oversee the settlement process at the merchant level, ensuring their clients receive their funds.


In the complex world of electronic payments, Merchant Acquirers and Payment Processors play vital, interconnected roles. While they share common objectives, such as facilitating secure electronic payments and managing payment-related risks, they diverge in their specific functions and responsibilities.

Merchant Acquirers focus on building relationships with merchants, ensuring they comply with industry regulations, and offering customer support. They are instrumental in underwriting merchant accounts, managing fees, and overseeing the settlement of funds at the merchant level. On the other hand, Best Payment Processors interact directly with customers, authorizing and processing payment transactions, and providing customer support for cardholders. Their primary revenue comes from transaction processing fees, and they are responsible for risk assessment at the transaction level.

Understanding these distinctions is crucial for businesses and consumers alike. Merchants need to choose the right Merchant Acquirer to support their payment processing needs, while consumers benefit from Payment Processors that ensure seamless and secure transactions. The collaborative efforts of these two entities ensure that the global electronic payments ecosystem operates efficiently, promoting trust and reliability in the world of digital commerce.