An acquirer is a company that acquires rights to another company or business relationship through a deal. Acquirers can buy out a company to take over their ownership. Commonly, acquirers are also financial institutions which acquire rights to a merchant account which allows them to service and manage the merchant’s bank account.
Breaking down Acquirer
Acquirer relationships can vary by the type of deal in place. Corporations can acquire another company through a deal process that allows them to pay an agreed-upon price for the rights to take ownership of another company and integrate it with their current business operations. In the payments industry, an acquirer may also be a financial institution that partners with a merchant to complete electronic payment transaction and deposit processing.
In a corporate acquisition, the acquirer is the company purchasing another company for a specified price. Corporate acquisitions are usually agreed upon by two parties. They allow an acquiring company to fully take over a business for a specified price. In an acquisition, the acquiring company believes that they gain profit from buying out another company and integrating its business with their own.
In acquisitions involving public companies, the acquirer will usually see a short term stock price drop when acquiring a company. The drop is usually due to the uncertainty of the transaction and the premium that the acquirer pays for the purchase.
Merchant Acquirer Agreements
In a merchant acquirer agreement, the acquirer serves as a third-party partner to a merchant. Merchants must partner with a financial institution to process electronic transactions and receive electronic payments. A merchant acquirer is generally a bank service provider that manages electronic deposits of funds from clients paid to a merchant account. A merchant acquirer can also be known as a settlement bank as they facilitate communication and settlement of merchant payments.
Every time a debit or credit card is used to make a payment, the merchant acquirer must be contacted for processing and settlement. A merchant acquirer may dictate the types of payments it will allow for processing. Generally, acquirers have processing relationships with a network of providers, usually including major processors such as Visa, Mastercard, and American Express. Some merchant acquirers may only have network rights with a single branded card processor which may limit the types of branded cards the merchant may accept.
An acquirer will charge a merchant varying fees which are detailed in their agreement. Most acquirers charge a per-transaction fee as well as a monthly fee. The acquirer’s per-transaction fees cover the costs associated with network processing. Monthly fees may also be charged to cover various other servicing aspects of the account.