FinTech Glossary

Meaning

An acquiring bank, or merchant acquirer, is the financial institution that processes card payments on behalf of a merchant, ensuring funds from a customer's card transaction are deposited into the merchant's account.

Business Context

Acquiring banks work alongside payment gateways, card networks, and issuing banks to complete the payment processing chain. In India, acquiring banks must comply with RBI guidelines and PCI DSS standards for secure transaction handling.

Role in the Payment Flow

When a customer pays by card, the acquiring bank routes the authorization request through the card network to the issuing bank, then receives the settlement funds and credits the merchant's account, typically within one to three working days, after deducting the merchant discount rate (MDR).

Why It Matters for Businesses

The acquiring bank relationship affects settlement speed, transaction fees, and dispute resolution processes, making it an important consideration for businesses choosing a payment gateway or POS provider.