Mastercard Acquirer: What It is, How It Works

What Is a Mastercard Acquirer?

A Mastercard acquirer is a merchant bank or other financial institution that accepts and processes transactions made with a Mastercard. Mastercard partners with institutions all over the world to offer Mastercard-branded payment cards.

Mastercard payment cards exclusively use its network for processing all transactions. Payment cards may be credit, debit, or prepaid cards.

Understanding Mastercard Acquirers

A Mastercard acquirer is a merchant bank or financial institution licensed to work with merchants, process and settle transactions, and resolve issues involving transactions. Acquirers work with issuers to ensure that a payment card transaction is authorized.

When a cardholder swipes a Mastercard for payment, this initiates a series of steps to authorize the transaction. A request is made to the Mastercard acquirer, which in turn places a request to the card issuer—not Mastercard—to authorize the transaction. If the cardholder's account holds sufficient funds, the card issuer sends an authorization code to the acquirer, who then authorizes the transaction to be made by the merchant.

Payment card industry (PCI) compliance is an important priority for Mastercard and its acquirers. Mastercard offers a training program for acquirers, called the PCI 360 Education Program. This program helps acquirers engage with merchants to strengthen and expand the enforcement of 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 building a PCI compliant system for managing card and financial information, which involves ensuring that transactions and card information are secure. Because the acquirer works with merchants accepting Mastercard transactions, they should ensure merchants understand how to keep transactions secure and PCI compliant.

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 may change over time according to the needs of the business.

The amount a merchant receives from a credit card payment is less than the amount charged. This is because both the card issuer and Mastercard acquirer subtract service fees. The fee subtracted by the issuer is called the interchange rate, and the fee subtracted by the acquirer is called the discount rate. Mastercard also imposes an acquirer license fee that businesses must pay as part of the expense involved with credit card processing. These fees are usually calculated as a percentage of the sale plus a fixed fee. For example, 1.80% + $0.10. This ensures the issuer and acquirer receive the optimal payment amount, even if the original transaction was for a high or low dollar amount.

This is just one example of the variety of fees that a business pays when they accept Mastercard, or any other credit card, as payment for products or services sold.