Modern credit card processing can be completed in a matter of seconds. As the financial transactions have become more complicated, it has lead Visa and Mastercard to hire third-party “acquirers” (or “acquiring banks”) to improve the process. Here is information on the credit card processing acquirers.
Visa & MasterCard Licensed Acquiring Banks
Every day, there are millions of credit and debit card transactions. Visa and MasterCard have added licensed acquirers to help merchants complete their financial transactions. The acquirer receives the financial information from the merchant when a credit card is swiped or read.
The acquirer has the responsibility to authenticate (or verify) the identification of the consumer. This involves comparing the credit card account number and PIN with the list of valid IDs provided by the credit card issuing banks. The acquirer will determine if the consumer is a real customer or con artist.
If Credit Card Authentication ID is Invalid: Denial
When the key codes don’t match, then the acquirer will send a message to the merchant account that the transaction is denied.
If Credit Card Authentication ID is Valid: Approval
When the key codes match, then the acquirer will send the authorization request to the credit card bank to check to see if the customer account has enough funds. Visa and MasterCard have the final say in all of their credit card transactions.
Added Acquirer Powers
Gradually, acquirers have been given power to issue their own debit and credit cards. They can also create their own electronic credit card point-of-sale (POS) machines. This has improved the speed of credit card processing tremendously.
A merchant account using the acquirer credit card might involve the acquirer verifying and authorizing a transaction. Certain merchants might prefer this type of unified acquirer system. Acquiring banks have developed closer relationships with their merchants. Once data reaches the acquirer, it becomes part of the “acquirer zone.”
Merchants have the ability to choose a wider variety of services by selecting their own acquirers. The merchant account has benefited with higher speed and accuracy. MasterCard and Visa level fines against acquirers for failure to adhere to their guidelines. Other nations have their own credit card processing techniques and systems in place.