DEFINITION of ‘Mastercard Acquirer’
A financial institution that accepts and processes transactions made with a MasterCard card. A MasterCard acquirer is a business that is licensed to work with merchants, process transactions, and settle transactions. The MasterCard acquirer works with issuers to ensure that a payment card transaction is authorized.
BREAKING DOWN ‘Mastercard Acquirer’
When a MasterCard paycard is swiped by a cardholder, it sets off a series of steps that are designed to authorize the transaction. Once the card is swiped, 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 has sufficient funds an authorization code is sent from the card issuer to the acquirer, who then authorizes the transaction to be made by the merchant.
MasterCard acquirers provide a number of services that ultimately allow a merchant to accept MasterCard payment cards. 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 the merchants running MasterCard transactions, they should ensure that the merchants understand how to keep transactions secure and PCI compliant.
MasterCard acquirers also work with the merchants using their services to ensure that they have chosen the correct merchant level, which is based on the volume of transactions. The merchant level may change over time according to the needs of the business.
The amount that a merchant receives from a payment made by credit card is less than the amount that the card was charged. This is because both the credit card issuer and the MasterCard acquirer subtract fees for their services. The fee subtracted by the issuer is called the interchange fee, and the fee subtracted by the acquirer is called the discount rate.