What is a Mastercard acquirer?
A Mastercard acquirer is a investment bank or another financial institution that accepts and processes transactions made with a MasterCard. Mastercard partners with institutions around the world to offer Mastercard-branded payment cards.
Mastercard payment cards exclusively use its network for the processing of all transactions. Payment cards can be credit, debit or prepaid cards.
Key points to remember
- A Mastercard acquirer is a financial institution, usually a merchant bank, approved by Mastercard to help merchants accept Mastercard payments.
- To accept Mastercard, a business must first contact an acquirer to begin the merchant account application.
- While a card issuer manages the marketing and financial support of a credit card, the acquirer maintains customer relationships, provides merchant services, and ensures regulatory compliance.
Understanding Mastercard Acquirers
A Mastercard acquirer is a merchant bank or financial institution authorized to work with merchants, process and settle transactions, and troubleshoot transaction-related issues. Acquirers work with issuers to ensure that a payment card transaction is authorized.
When a cardholder swipes a Mastercard for payment, it triggers a series of steps to authorize the transaction. A request is made to the Mastercard acquirer, who in turn sends a request to the card issuer – not Mastercard – to authorize the transaction. If the cardholder’s account has sufficient funds, the card issuer sends an authorization code to the acquirer, who then authorizes the transaction to be carried out by the merchant.
Payment Card Industry (PCI) Compliance is an important priority for Mastercard and its acquirers. Mastercard offers an education program for acquirers called PCI 360 Education Program. This program helps acquirers engage with merchants to strengthen and expand compliance with PCI security standards.
Mastercard Acquirer Services and Fees
Mastercard Acquirers provide a number of services that allow a merchant to accept Mastercard payments. The acquirer is ultimately responsible for implementing a PCI-compliant system for managing card and financial information, which includes ensuring transactions and card information are secure. Since Acquirer works with merchants that accept Mastercard transactions, Acquirer must ensure that merchants understand how to ensure transaction security and PCI compliance.
Mastercard acquirers also work with merchants to ensure they have chosen the correct merchant level, which is based on transaction volume from the most recent 52-week period. The merchant level can change over time depending on the needs of the business.
The amount a merchant receives from a credit card payment is less than the amount charged. Indeed, the issuer of the card and the acquirer of the Mastercard subtract service fees. The commission subtracted by the issuer is called the interchange rateand the commission subtracted by the acquirer is called the discount rate. Mastercard also imposes an acquirer license fee that businesses must pay as part of credit card processing expenses. These fees are usually calculated as a percentage of the sale plus a flat fee. For example, 1.80% + $0.10. This ensures that the issuer and acquirer receive the optimal payment amount, even if the original transaction was for a high or low amount.
Mastercard’s interchange rates are generally updated semi-annually and published on its website.
This is just one example of the variety of fees a business pays when accepting Mastercard, or any other credit cardas payment for products or services sold.
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