To begin with, acquiring is a banking product that enables service establishments and commercial organizations to accept the payment with plastic bank cards.
So, what does the term of acquiring bank involve?
An acquiring bank is entitled as a financial establishment that organizes the acquiring process, providing the points of service with specific terminals and making a comprehensive range of financial transactions. In other words, all operations are realized using plastic bank cards in organized exact conditions.
The core functions accomplished by acquiring banks
What are the essential duties of acquirers?
Firstly, it goes about making remittance of funds for products and different services that have been paid by the card to the current account of the sales point. Besides, it is liable for the reimbursement of funds to points of sale where the products or services were paid by the cards.
Secondly, acquiring banks are aimed at performing mandatory card authorization processing requests. In addition, it accepts, sorts and sends electronic and paper documents that confirm the completion of all transactions using the cards. Besides, the distribution of stop lists containing a list of cards for which operations have been suspended (for instance, it can happen because of the card blocking or lack of funds, etc.) is also under the control of acquirer banks.
Transactions through acquirers and issuing bank
When performing bank operations, the acquirer bank effects payment within the system of payment from the bank that has issued the card to its service point. The payment transaction between the acquirer and the issuer is provided by a settlement bank, where the correspondent accounts of these two credit organizations are opened.
So, when making a payment by bank card, the acquiring bank, which accepts payments in the point of sale, gets your card details. In the next step, it makes a request for authorizing the required amount of money for the purchase and transfers this data to the issuing bank through the payment system. The bank of issue checks the payment card and approves the authorization or rejects it. This process takes not a big deal of time, just a few seconds.
How is the acquiring bank credit card processing?
You can divide the whole procedure of the transaction into the following stages:
- The card owner presents it to the vendor for making a purchase.
- He enters a PIN code or attaches a card to the device (if there is an option for contactless payment system).
- An acquirer makes a request for authorizing the required amount of money to the bank of issue through the payment service.
- Then, the bank of issue checks the card (its validity period, whether it is blocked), and verifies the amount available on the card.
- If the answer is positive, the authorization will be confirmed and payment will pass. In this case, the customer will be given a card, a check from the given point-of-sale terminal and a purchase.
- If the answer is negative, the operation will be rejected answering “your card is blocked” or “insufficient funds in the bank account”.