Acquiring bank. What is it and what are its functions?

[Mutt]

We all pay with bank cards from time to time. Moreover, contactless payments are increasingly being introduced into the life of a modern person (for example, PayPass technology). It is an excellent alternative to cash, allowing consumers who do not have banknotes or coins with them at the moment to make a variety of purchases.

When a person pays, for example, in a supermarket, there may be an inscription on the check concerning the commission of the acquiring bank. The acquiring bank is also mentioned in the instructions for bank cards. It will be useful for owners of credit and debit cards to replenish their knowledge box with this concept, which is the main link in the chain of cashless payments between the cardholder and the bank that issued it.

Acquiring bank. What is it?
Acquiring bank is a bank that organizes automated points for accepting plastic bank cards. For this purpose, a credit institution (acquiring bank) uses terminals and ATMs. But the installation of a terminal for accepting cards is far from the only operation carried out by this credit institution with the "acquirer" prefix. Such a bank performs a full range of financial transactions reflecting settlements and payments by bank cards.

Acquiring bank functions
The list of basic operations for which the acquiring bank is responsible includes:

• mandatory card authorization;
• processing incoming requests via the map;
• when paying with a plastic card, the acquirer guarantees the transfer of funds to the current account of the outlet where the purchase was made;
• the acquiring bank deals with all-round processing of documents (both paper type and electronic), which confirm the transaction using the card.

Thus, an acquiring bank is a financial institution that conducts payments to bank cards. These banks own a processing server associated with the most popular closed banking networks. A similar server is used by the institution to authorize the product (card), after which the payment occurs.

The essence of acquiring by examples
To understand the whole essence of acquiring, you will have to touch upon another component of the payment process, we are talking about the issuing bank, which directly issues and services a bank card.

For a better understanding, let's simplify the concepts of an acquiring bank and an issuing bank: the acquirer owns a terminal or an ATM in which the cards are serviced, and the issuer issues these same cards; the issuer controls all operations on the card issued by it, and the acquirer serves the customer-customer at the moment when he performs operations with the card.

It is quite possible that one financial institution was both an acquirer and an issuer at the same time.
For example, if you are a holder of a bank card and want to withdraw funds from it at an ATM of this bank, then in this case bank will be both the issuing bank and the acquiring bank.

Another example, if you have a bank card (and bank does not have its own ATM network at all) and you withdraw money from a bank ATM, then bank in this case is the acquiring bank, and bank is the issuing bank.

What happens in this case.

When you make a payment using a bank card, the bank that accepts payments at the merchant (acquiring bank) receives your card details, then it makes a request to authorize the required amount for the purchase and transmits this data through the payment system (usually Visa or MasterCard ) to the bank that issued your card (issuing bank). The issuing bank checks the bank card (its validity period, is it blocked, the availability of the required amount on the card account) and confirms the authorization or refuses it. All this happens in a few seconds (although it happens that this time stretches for minutes) and is done automatically.

It is when you withdraw money from an ATM other than your bank that you are charged a commission - this is the payment for acquiring services. At the same time, the commission for paying by credit card or payment card in the store is not charged from the buyer (this is already a condition of payment systems), this burden falls on the issuing bank. You can learn more about the acquiring service in this article.

 

[CarderPlanet]

An acquiring bank is an intermediary that helps a business owner to accept payments when paying for goods or services with a payment (including credit) card. In other words, the bank carries out such a procedure as acquiring. We come across it every time we pay in a store with a bank card. Let's consider this scheme in more detail.

The scheme in which the acquiring bank is involved​

The buyer comes to the store and wants to pay with a plastic bank card. To do this, the owner must have a special account - just in the acquiring bank. The seller accepts the buyer's card, passes it through a special POS terminal - a request is sent to the acquiring bank. He, in turn, sends a request to the closed network of the payment system: UnionCard, MasterCard, Visa - depending on what the client uses. Next, the system asks for permission to use the card from the issuing bank- the financial institution that issued the client's card. The issuing bank conducts the operation, the payment system passes it - and the client's money is debited from his account to the account of the business owner opened with the acquiring bank. It is according to this scheme that non-cash payments are carried out - the most convenient for a modern service.

Thus, the acquiring bank is not only the custodian of the account and money, but also an important intermediary, submitting requests to all systems whose permission is needed for the operation.

Acquiring bank functions​

Such an institution performs several functions at once:

• Provides convenient operation of points when servicing a customer card.
• Authorizes cards and transfers funds to the accounts of owners who sell services or products. This is done almost instantly, using the Internet.
• Accepts, processes, and also forwards documents containing information about card transactions. Documents can be in paper or electronic form - it doesn't matter.
• Draws up and distributes stop lists with data about cards, operations on which for some reason are suspended.

Acquiring banks can (and often do) combine their activities with those of issuing banks. In this case, the number of their functions is significantly expanded.

Peculiarities of acquiring, connection​

Since the bank in this case is an intermediary and organizes the whole process, the service provider must pay both a monthly subscription fee and a percentage from each transaction. On average, this is about 300 hryvnia every month, plus 2% from each operation performed.

Acquiring banks often offer additional conditions: for example, they reduce the amount of the monthly fee if a merchant processes a lot of transactions every month, or offers special conditions for working with their own cards. Before concluding an agreement, it makes sense to inquire not only about the tariffs posted on banking sites, but also about additional conditions that the business owner can voice individually.

Connection algorithm​

Acquiring connection takes place in several stages:

1. The choice of a bank, taking into account the most favorable and convenient tariffs. If you already have a current account, the study begins with the bank in which it is opened.
2. Opening a current account in order to receive funds from clients.
3. Conclusion of an acquiring agreement. Carefully study the terms of the agreement - compare them with the terms of the tariff posted on the website.
4. Purchase or receipt of a terminal for payment. Some banks sell such equipment, while others already include it in the cost of the service.
5. Terminal work training. The bank representative will install, configure the equipment, teach employees how to use it.

These steps concern the so-called merchant acquiring. And then there is the concept of "Internet acquiring" - this is the acceptance of payment from plastic cards, but in online stores. To get this opportunity, you must:

• contact a bank that provides Internet acquiring services;
• choose a suitable tariff;
• conclude an agreement for the provision of services;
• purchase and install the necessary software on the website (the selected bank informs about the list);
• configure payment through your personal account.

It usually takes no more than two days to connect to the Internet service. Merchant acquiring takes up to 10-14 days, but in most cases it will take much less time.