Merchant acquirer vs payment processor: What’s the difference?

Accepting payments online may seem to be a straightforward process. However, in reality, there might be different models and scenarios. Card acquirers, payment processors, and payment service providers have their own roles in the payments process. Still, these roles (and the differences between them) are not always properly explained. This can lead to misconceptions, such as mistaking merchant acquirers (AKA bank card acquirers) for payment processors.

This post aims to shed some light on the issue. We’ll cover these questions:

• What is a merchant acquirer (AKA card acquirer)?
• What is a payment processor?
• What is a payment service provider?
• What are their roles?
• How do they fit your business model?

Let’s start with the definitions.

The payment card acquirer is a member of a card organisation, such as Visa or Masterсard, entering into an agreement with a merchant and maintains its account to accept payments. As such, it acts as an intermediary between the merchant and the international payment systems.

The card acquirer enables merchants to accept credit, debit, or prepaid card payments.

The payment processor is a company or a financial institution that has direct technical access to payment systems and carries out the technical processing of online payments, such as credit, debit or prepaid card payments (Visa, Mastercard, American Express, etc.)

• The payment processor executes the transaction

PSP or Payment service provider is an entity that provides payment card services to merchants, based on an agreement with the acquirer. A PSP may also provide access to Alternative Payment Methods, such as Alipay, WeChat, etc., to process other types of transactions.

• The PSP provides a service that allows merchants to accept various types of payments

The card acquirer enables merchants to accept credit, debit, or prepaid card payments.

The difference between a payment processor and acquirer (AKA card acquirer), and a PSP, is that these entities perform different tasks.

A card acquirer maintains the merchant’s account to accept payments for them, whereas a payment processor is only responsible for processing payments; merchants do not deal directly with the processor during the payment process.

A merchant may choose to work with both the acquirer and a PSP. They may also choose a PSP as the sole party to work with, so the PSP handles the entire payment process. This way, a merchant would have a single company accepting both card payments and Alternative Payment Methods.

As for Ecommpay, we are a Visa and Mastercard Principal Member, a payment solution provider, and a direct acquirer. This means Ecommpay can process online payments via prepaid, debit, and credit cards, as well as also process Alternative Payment Methods.

So, what causes the confusion? Although these integral parts of the payment process are clearly performing different, separate tasks, sometimes a single company combines several of them together. For example, the same organisation that processes payments may also provide merchant acquiring services (known as direct acquiring).

Moreover, the same company or financial institution can provide services for accepting both cards and Alternative Payment Methods. When selecting a payment partner, it is important to keep the big picture in mind - and choose a company that can offer a tailored solution to satisfy all your business needs.