Processors and acquirers are often used interchangeably, but they serve distinct roles. This confusion arises because both are involved in handling transactions, but their functions and responsibilities differ significantly.
A payment processor is a technology provider that facilitates communication between merchants, acquiring banks, and card networks (Visa, Mastercard, etc.). Processors are responsible for:
🔹 Transaction Routing
🔹 Authorisation & Settlement
🔹 Fraud & Risk Monitoring
The acquirer on the other end is the financial institution that enables merchants to accept card payments. Unlike processors, acquirers take on financial risk because they sponsor merchants into the card networks and assume the liability if a merchant goes bankrupt or faces excessive chargebacks etc.
So wonder how the two work together?
In a nutshell:
✔️ Processors handle the technical side – routing transactions, security, and approval flows.
✔️ Acquirers manage the financial side – merchant accounts, settlement, and risk management.
Processors and acquirers are often confused due to overlapping roles and industry terminology. Some companies function as both, making it difficult to differentiate their responsibilities. Additionally, merchants typically work directly with an acquirer, not the processor, which operates in the background to handle transaction routing. The confusion is further compounded by broad terms like “payment provider” and “merchant services,” which fail to clearly distinguish between the two, leading to misconceptions about their distinct roles in payment processing.
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