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What is an Acquiring Bank?

Or more commonly known as "the Processor", an acquiring bank handles the card data and security for a merchant account. 

The acquiring bank’s responsibility is to connect the merchant account to the processing network so it reaches the issuing bank for an approval or decline response. The acquiring bank is also the entity that funds your sales to your business bank account, as well as compensates your customers bank (the issuer) for their fees. When you see a deposit for your card processing, the issuing bank has also seen payment for their fees incurred on the sale.

The acquiring bank is the institution "holding the risk" on the payments you run. They are required to set aside large sums of money to cover potential losses, so acquiring banks are typically larger banks. Acquiring banks often sit "behind" the processor - they don't actually make underwriting decisions, but set guidelines and act as the back-end funding source.

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