The issuer is the bank or institution that issues a payment card to a customer, holds the cardholder's account and decides whether to approve a payment. The acquirer is the bank or financial institution that provides the merchant with the ability to accept cards and receives funds on the merchant's behalf.
Why it matters
These two parties sit at either end of the standard four-party card model, with the card network in the middle. Knowing who is who helps in reading declines and disputes: a decline code originates with the issuer, while onboarding, risk review of a merchant and payouts come from the acquirer. Fees follow the same path: the acquirer pays an interchange fee to the issuer, charges the merchant a fee that covers it, and the network takes its own scheme fee. Payment processors and gateways often work on behalf of an acquirer.
Example
A customer with a card from Bank A buys from a shop whose payments are acquired by Bank B. Bank B sends the request via the network to Bank A (issuer), which approves it. After clearing, Bank A sends funds, minus interchange, to Bank B, which pays the merchant after deducting its own fee.
Common mistakes
- Contacting the acquirer about a cardholder's declined card. Only the issuer knows the reason.
- Thinking the processor is the acquirer. Sometimes they are separate.
- Assuming issuer and network are the same company.
Rules vary by country; this entry is a definition only.
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