Mastercard Acquirer: What It is, How It Works

What Is a Mastercard Acquirer?

A Mastercard acquirer is a financial institution that accepts and processes transactions made with a Mastercard. Mastercard partners with institutions worldwide to offer Mastercard-branded payment cards.

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

Key Takeaways

• A Mastercard acquirer is a financial institution, usually a merchant bank, licensed by Mastercard to help merchants accept Mastercard payments.
• To accept Mastercard, a business must contact an acquirer to apply for a merchant account.
• While the issuer handles the marketing and financial backing of a credit card, the acquirer maintains customer relationships and provides merchant services while ensuring regulatory compliance.

Understanding Mastercard Acquirers

A Mastercard acquirer is a financial institution licensed to work with merchants, process and settle transactions, and resolve transaction issues. Acquirers work with issuers to authorize payment card transactions.

When a cardholder swipes a Mastercard for payment, it initiates a series of steps to authorize the transaction. A request is made to the Mastercard acquirer, which then 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 for the merchant.

Payment card industry (PCI) compliance is a priority for Mastercard and its acquirers. Mastercard offers a training program called the PCI 360 Education Program to help acquirers engage with merchants, enforce PCI Security Standards, and enhance compliance.

Mastercard Acquirer Services and Fees

Mastercard acquirers provide services that allow a merchant to accept Mastercard payments. The acquirer is responsible for building a PCI compliant system to manage card and financial information securely. They must ensure that merchants understand how to keep transactions secure and PCI compliant.

Mastercard acquirers also assist merchants in selecting the appropriate merchant level based on transaction volume from the most recent 52-week period. The merchant level may change according to business needs.

The amount a merchant receives from a credit card payment is less than the amount charged. Both the card issuer and Mastercard acquirer subtract service fees. The issuer subtracts the interchange rate, and the acquirer subtracts the discount rate. Mastercard also imposes an acquirer license fee that businesses must pay for credit card processing expenses. These fees are usually calculated as a percentage of the sale plus a fixed fee (e.g., 1.80% + $0.10) to ensure optimal payment amounts for the issuer and acquirer, regardless of the transaction amount.

Mastercard interchange rates are usually updated semiannually and published on its website.

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