Carder
Professional
- Messages
- 2,619
- Reaction score
- 1,883
- Points
- 113
Holders of plastic cards have heard expressions such as "issuing bank" and "acquiring bank". Many believe that these are equivalent concepts. In fact, the difference is huge. In fact, these are two ends of the same chain. If the issuing bank is the bank that issued and services the card, then the acquiring bank is the bank through which operations are carried out on the card. The process of cashless payment from a card takes a few seconds.
During this time, a huge number of transactions and signals are carried out between the bank that issued the card and the bank conducting the operation. This entire process is fully automated and is carried out without the participation of the human factor. It does not cause any inconvenience to the client. What is an acquiring bank and how it works, we will consider in this article.
Article content
What is acquiring?
This is the process of accepting bank cards for payment through terminals and ATMs at retail outlets. Reception is associated with a whole range of financial transactions, settlements and payments. Acquiring, as a banking service, enables trade organizations to accept bank plastic cards for payment. From a technical point of view, acquiring carries out automated payments on cards through a processing center located in the bank and connected with Visa, Mastercard and other networks.
For the cardholder, the whole point of acquiring is to insert the card into the terminal (or attach it using Pay Pass or Pay Wave technology), enter the PIN code, pay for the purchase and pick up the goods. In these few seconds, the machines carry out data processing and transmission operations, check if there is enough money on the card, receive information from the issuing bank whether the transaction can be carried out or not. All data passes through the participants in the chain of bank settlements, often geographically located in different cities and countries.
For this, the trading company concludes an agreement with the bank, under which the bank provides a payment terminal, configures the software and provides all the necessary support. Acquiring is handled by an acquiring bank.
What is an acquiring bank?
This is a credit organization that organizes the acquiring process by supplying retail outlets with special terminals and conducting a full range of financial transactions. This list includes:
The acquiring bank trains employees of the trade organization in servicing clients-cardholders, provides all kinds of support during work.
The acquiring bank can also be the issuing bank. For example, a client has an Alfa-Bank card, by which he withdraws cash from an Alfa-Bank ATM, or pays for purchases in a store where an Alfa-Bank payment terminal is installed.
It often happens that the acquirer and the issuer are different organizations. For example, a customer has a Tinkoff card and withdraws cash from it at a Binbank ATM. In this case, Tinkoff will be the issuer, and B&N Bank will be the acquirer.
How to become an acquiring bank?
Acquiring services are available in almost all major banks. To do this, you need to have your own processing center for processing information and install payment terminals at retail outlets, ensuring smooth operation. If the bank does not have its own processing center, then it can transfer the technical side to specialized service organizations.
How is the acquiring transaction going?
The whole process consists of the following chain:
Despite the fact that the purchase will be paid "at the moment", the actual settlement takes place within a few days. Each cardholder can see this process on the statement. Unprocessed transactions are in a HOLD or frozen state. This usually lasts for 1-3 business days. The acquirer is obliged to transfer money to the trade organization during this time, and after that provide clearing documents confirming the payment to the issuing bank and receive from it the money “frozen” on the client's account.
According to statistics, people prefer to pay for purchases by card. At the same time, they spend 20-30% more than if they paid in cash. Payment by card allows you to serve your expenses and frees you from the need to constantly count money, take change. Trade organizations that have payment terminals look more prestigious and respectable in the eyes of their clients. For them, acquiring is convenient in the sense that they do not need to deal with cash collection. The likelihood of hitting counterfeit banknotes is also excluded, the turnover and customer flow increase.
For the operation, the acquiring bank charges the trade organization a commission in the established amount - on average 1-5%. It is important that this commission is paid not by the client, but by the store. The trade organization does not have the right to make an additional markup when paying by card, since payment systems are on the client's side. They prohibit increasing prices if the client wants to pay by card. The scheme of interaction here is complex, multifactorial and closed to outsiders.
If we are talking about withdrawing cash from an ATM, then the client himself pays the commission. This happens if the issuer and acquirer do not match, and there is no partnership between them. In fact, a person uses the services of an acquiring bank, uses its production capacities, resources, so the issuer withholds a commission in order to pay off the acquirer later.
Who is engaged in acquiring at the bank and what regulatory documents govern it?
The acquiring bank has a special acquiring department that is responsible for transactions, information processing and technical support. Specialists conclude contracts for trade acquiring, visit and install terminals, train personnel to work with devices, monitor the smooth operation of the processing center (if it is located in a bank), and promptly eliminate problems.
The acquiring process is regulated by internal banking regulations, Federal Law No. 203 dated June 3, 2009 “On the activity of accepting payments from individuals ....”, Federal Law No. 161 dated June 27, 2013 “On the national payment system”, etc.
During this time, a huge number of transactions and signals are carried out between the bank that issued the card and the bank conducting the operation. This entire process is fully automated and is carried out without the participation of the human factor. It does not cause any inconvenience to the client. What is an acquiring bank and how it works, we will consider in this article.
Article content
- What is acquiring?
- What is an acquiring bank?
- How to become an acquiring bank?
- How is the acquiring transaction going?
- Who is engaged in acquiring at the bank and what regulatory documents govern it?
What is acquiring?
This is the process of accepting bank cards for payment through terminals and ATMs at retail outlets. Reception is associated with a whole range of financial transactions, settlements and payments. Acquiring, as a banking service, enables trade organizations to accept bank plastic cards for payment. From a technical point of view, acquiring carries out automated payments on cards through a processing center located in the bank and connected with Visa, Mastercard and other networks.
For the cardholder, the whole point of acquiring is to insert the card into the terminal (or attach it using Pay Pass or Pay Wave technology), enter the PIN code, pay for the purchase and pick up the goods. In these few seconds, the machines carry out data processing and transmission operations, check if there is enough money on the card, receive information from the issuing bank whether the transaction can be carried out or not. All data passes through the participants in the chain of bank settlements, often geographically located in different cities and countries.
For this, the trading company concludes an agreement with the bank, under which the bank provides a payment terminal, configures the software and provides all the necessary support. Acquiring is handled by an acquiring bank.
What is an acquiring bank?
This is a credit organization that organizes the acquiring process by supplying retail outlets with special terminals and conducting a full range of financial transactions. This list includes:
- Authorization of the card for its validity and operability.
- Processing requests for the card.
- Guaranteed transfer of money from the acquirer to the current account of the trade organization where the transactions were made.
- Processing of electronic documentation that confirms the transaction.
- Distribution of stop lists containing a list of cards on which operations are suspended (for example, due to card blocking, lack of funds, etc.).
The acquiring bank trains employees of the trade organization in servicing clients-cardholders, provides all kinds of support during work.
The acquiring bank can also be the issuing bank. For example, a client has an Alfa-Bank card, by which he withdraws cash from an Alfa-Bank ATM, or pays for purchases in a store where an Alfa-Bank payment terminal is installed.
It often happens that the acquirer and the issuer are different organizations. For example, a customer has a Tinkoff card and withdraws cash from it at a Binbank ATM. In this case, Tinkoff will be the issuer, and B&N Bank will be the acquirer.
How to become an acquiring bank?
Acquiring services are available in almost all major banks. To do this, you need to have your own processing center for processing information and install payment terminals at retail outlets, ensuring smooth operation. If the bank does not have its own processing center, then it can transfer the technical side to specialized service organizations.
How is the acquiring transaction going?
The whole process consists of the following chain:
- The cardholder presents it to the trade organization for the purchase.
- Enters a PIN code or applies a card to the device (if there is a contactless payment option).
- The acquiring bank makes a request for authorization of the required amount to the issuing bank through the payment system.
- The issuing bank checks the card for operability, the size of the balance.
- If the answer is yes, the authorization is confirmed and the payment goes through. The buyer is given a card, a check from a POS terminal and a purchase.
- If the answer is negative, the operation is rejected with an answer, for example, "your card is blocked" or "there is not enough funds in the account", etc.
Despite the fact that the purchase will be paid "at the moment", the actual settlement takes place within a few days. Each cardholder can see this process on the statement. Unprocessed transactions are in a HOLD or frozen state. This usually lasts for 1-3 business days. The acquirer is obliged to transfer money to the trade organization during this time, and after that provide clearing documents confirming the payment to the issuing bank and receive from it the money “frozen” on the client's account.
According to statistics, people prefer to pay for purchases by card. At the same time, they spend 20-30% more than if they paid in cash. Payment by card allows you to serve your expenses and frees you from the need to constantly count money, take change. Trade organizations that have payment terminals look more prestigious and respectable in the eyes of their clients. For them, acquiring is convenient in the sense that they do not need to deal with cash collection. The likelihood of hitting counterfeit banknotes is also excluded, the turnover and customer flow increase.
For the operation, the acquiring bank charges the trade organization a commission in the established amount - on average 1-5%. It is important that this commission is paid not by the client, but by the store. The trade organization does not have the right to make an additional markup when paying by card, since payment systems are on the client's side. They prohibit increasing prices if the client wants to pay by card. The scheme of interaction here is complex, multifactorial and closed to outsiders.
If we are talking about withdrawing cash from an ATM, then the client himself pays the commission. This happens if the issuer and acquirer do not match, and there is no partnership between them. In fact, a person uses the services of an acquiring bank, uses its production capacities, resources, so the issuer withholds a commission in order to pay off the acquirer later.
Who is engaged in acquiring at the bank and what regulatory documents govern it?
The acquiring bank has a special acquiring department that is responsible for transactions, information processing and technical support. Specialists conclude contracts for trade acquiring, visit and install terminals, train personnel to work with devices, monitor the smooth operation of the processing center (if it is located in a bank), and promptly eliminate problems.
The acquiring process is regulated by internal banking regulations, Federal Law No. 203 dated June 3, 2009 “On the activity of accepting payments from individuals ....”, Federal Law No. 161 dated June 27, 2013 “On the national payment system”, etc.
