The acquiring side comprises the merchant and the acquirer. The role of the acquirer is to process credit or debit card payments on behalf of the merchant. To do so, the acquirer may create a merchant account and open a corresponding line of credit; however, a merchant account with a line of credit is not always created; for example, it is not mandatory with Stripe and PayPal. Under this agreement, the acquirers pay the merchant for the payments received daily.

Daily payments.

Gross sales
− Reversals
− Interchange fees
= Daily payments

Gross sales. It corresponds to the total sales value for merchandise sold through the e-commerce site or marketplace, for the set of payment methods offered by the e-commerce service, and the set of countries in which the merchant operates.

Reversals. Reversals or chargebacks correspond to a payment processing mechanism to return funds to the client. There are two types of reversals: those that comply with the sales term and are legitimate and those that are due to payment fraud.

Interchange fees. It corresponds to the amount acquiring banks pay for the privilege of accepting card-based transactions. The total interchange fee is the sum of the individual transaction fees charged by the card issuer, the card network, the acquirer, and the merchant’s own bank [1]; in practice, there are about 300 interchange fees [2, 3].

Acquirer fee. Finally, the acquiring bank charges the merchant acquirer fees.

References

  1. Bigcommerce. What are the interchange fees and how are they calculated?; 2017.
  2. American express interchange fees; 2017.
  3. Mastercard interchange fees; 2017.
  4. By stevepb [CC0]