If you’re new to the world of credit card payments, you might be wondering what the difference is between a merchant acquirer and a payment processor.
After all, both entities are involved in processing credit card payments, so it’s easy to see how someone might get confused.
But it’s important to understand the distinction between the two, as it can impact your business in a number of ways. Here’s a look at the key differences between merchant acquirers and payment processors.
How They Work Together
First, let’s take a look at how merchant acquirers and payment processors work together. Essentially, a merchant acquirer allows businesses to accept credit card payments by partnering with a financial institution that issues credit cards.
Meanwhile, a payment processor handles the technical aspects of processing credit card transactions, such as authorization, settlement, and funding.
Key takeaway: Merchant acquirers typically work with multiple payment processors in order to offer their customers a variety of options.
The Differences That Matter
Now that you know how they work together, let’s take a look at some of the key differences between these two types of businesses.
Fees
One of the biggest differences between merchant acquirers and payment processors is the fees they charge for their services. Merchant acquirers typically charge higher fees than payment processors because they assume more risk. For example, if a customer doesn’t pay their credit card bill, the merchant acquirer is on the hook for the entire amount. Payment processors, on the other hand, only charge for the services they provide and aren’t responsible for any outstanding debt.
Services
Another key difference is the services each type of company offers.
Merchant acquirers typically offer a wider range of services than payment processors because they have to be able to handle every aspect of the credit card transaction process. This includes things like fraud prevention, customer support, chargebacks, and more.
Payment processors, on the other hand, tend to focus solely on processing transactions quickly and efficiently.
Selecting The Right Partner
When it comes time to select either a merchant acquirer or payment processor for your business, there are a few things you’ll want to keep in mind. First and foremost, you’ll want to make sure you’re getting competitive rates on transaction fees. You’ll also want to consider which company can offer the best overall value in terms of services offered and customer support provided. Lastly, be sure to read the fine print carefully before signing any contracts.
Final words
As you can see, there are some key differences between merchant acquirers and payment processors that you should be aware of before selecting a partner for your business.
We at Brightman Group understand these distinctions, so you can be sure you’re getting the right solution to meet your specific needs — and avoid any potential pitfalls down the road.