DEFINITION of 'Acceptor'

The acceptor is the third party who accepts responsibility for payment in a bill of exchange. The bill of exchange will generally have three parties: the drawor, the drawee and the acceptor.


A simple example of an acceptor is a bank who accepts a check drawn against it and assumes responsibility for its payment. Company XYZ has paid Electric Company ABC through a check drawn against Bank DEF. When Electric Company ABC presents the check for payment, and the bank agrees to pay the check, it becomes the acceptor.

Acceptor and Other Commercial Banking Services

In addition to taking responsibility for checks, most commercial banks offer a wide range of services to its customers (both individuals or retail customers, along with enterprise or business customers). Commercial banks accept deposits, offer a suite of checking account services, and make business, personal and mortgage loans. With a residential mortgage loan, for example, a home buyer will pledge his house to a bank. The bank then has a claim on the house in the event that the home buyer defaults on making regular mortgage payments. The bank may evict the tenant(s) and sell the house In the case of a foreclosure,

In addition commercial banks offer basic financial products like certificates of deposit (CDs) and savings accounts. These are distinct from some more complex financial products that investment banks or asset managers sell, such as derivative securities.

When a commercial bank lends money to a customer, it charges a rate of interest that is higher than what the bank pays its depositors. This spread, known as net interest income, is how commercial banks generate revenues, along with charging additional service fees.

Acceptor, Commercial Banks, and Capital Requirements

Depository institutions have capital requirements, which regulatory agencies, such as the Bank for International Settlements, the Federal Deposit Insurance Corporation or the Federal Reserve Board set in place. These capital requirements ensure that banks have enough capital to honor withdrawals if they sustain operating losses. Adhering to capital requirements ensures that a bank will be able to act as an acceptor, taking responsibility for checks customers present.

The 2008 global financial crisis precipitated the passing of the Dodd-Frank Act of 2010, which ensured the largest U.S. banks would maintain enough capital to withstand systematic shocks and not default. A default of several major commercial banks could cause catastrophe for retail customers and higher net worth customers alike.

  1. Bank

    A bank is a financial institution licensed as a receiver of deposits. ...
  2. Commercial Account

    A commercial account is any type of financial account, which ...
  3. Business Banking

    Business banking is a company's financial dealings with an institution ...
  4. Capital Requirement

    A capital requirement is the standardized requirement for banks ...
  5. Bank Run

    A bank run occurs when a large number of customers withdraw their ...
  6. Universal Banking

    Universal banking is a system in which banks provide a wide variety ...
Related Articles
  1. Insights

    The Role of Commercial Banks in the Economy

    We interact with commercial banks daily to carry out simple financial tasks. That said, the function and creation of a commercial bank is anything but simple.
  2. Insights

    The World's Top 10 Banks

    Learn more about the world's largest banks and how more financial power shifts eastward as China is home to four of the world's largest banks.
  3. Personal Finance

    What is Fractional Reserve Banking?

    Fractional reserve banking is the banking system most countries use today.
  4. Tech

    The Pros And Cons Of Internet Banks

    Learn how internet banking services stack up against their brick-and-mortar peers. Find out what internet banks have to offer and where they fall short.
  5. Investing

    Analyzing a bank's financial statements

    In this article, you'll get an overview of how to analyze a bank's financial statements and the key areas of focus for investors who are looking to invest in bank stocks.
  6. Personal Finance

    What Else Banks Can Help With (Besides Banking)

    As competition increases and technology advances, banks, credit unions and savings institutions are offering more services intended to attract customers.
  7. Personal Finance

    10 Bank Promotions That Pay You to Open an Account

    Find out which banks are running cash promotions and will pay you just for opening a new account.
  8. Insights

    How Online Banking Is Overtaking Traditional Banking

    Is traditional banking doomed to be surpassed by online banking?
  1. What is the banking sector?

    Learn why the banking sector is a vital industry to our economy, what it does to drive the economic growth and understand ... Read Answer >>
  2. What factors are the primary drivers of banks' share prices?

    Find out which factors are most important when determining the share price of banks and other lending institutions in the ... Read Answer >>
  3. What is the average profit margin for a company in the banking sector?

    Learn what the average profit margin is for companies in the banking sector, along with other evaluation metrics often used ... Read Answer >>
  4. Why is the capital adequacy ratio important to shareholders?

    Understand what the capital adequacy ratio is and why it is a very important metric of financial soundness for evaluating ... Read Answer >>
  5. How do leverage ratios help to regulate how much banks lend or invest?

    Learn what leverage ratios mean for banks, how regulators restrict leverage, and what impact ratios have on a bank's ability ... Read Answer >>
Trading Center