Payment gateway, acquirer, processor: who does what?

Every time a customer pays by card, several companies are involved. Most businesses only see one or two names on their statement, so it can be hard to know who you are actually paying, and for what. Here is who does what, in plain English.

The payment gateway

The gateway is the technology that takes the card details from your checkout or card machine and passes them on securely. Think of it as the cable between your till and the banking system. Gateways usually charge a monthly fee, a fee per transaction, or both.

The acquirer

The acquirer, sometimes called the merchant acquirer or acquiring bank, is the company that holds your merchant account. It accepts the payment on your behalf, takes on the risk of you as a business, and pays the money into your bank account. Your acquirer is usually where most of your negotiable cost sits.

The processor

The processor is the technology that moves the transaction between the acquirer and the card schemes. Some acquirers run their own processing, others use a third party. As a merchant, you often do not deal with the processor directly.

The card schemes

Visa, Mastercard and others run the networks that connect everything. They set the rules and charge scheme fees on each transaction. These fees are not negotiable for most merchants, but you should be able to see them.

The card issuer

The issuer is the customer’s bank, the one that gave them their card. It decides whether to approve the payment and receives interchange, a fee paid on every card transaction.

Why this matters for your costs

• Interchange goes to the issuer and is set by the card schemes.
• Scheme fees go to Visa, Mastercard and the other networks.
• Acquirer margin goes to your acquirer, and is where negotiation happens.
• Gateway fees go to your gateway, and are often missed when businesses compare costs.

On a blended rate, all of this is bundled into one number, so you cannot see where your money goes. On interchange-plus-plus pricing, you see each part separately.

All-in-one or separate?

Some providers act as gateway, acquirer and processor in one. That can be simpler to set up. The trade-off is that it is harder to add a second acquirer or move part of your volume. Businesses that expect to grow, or sell in several countries, often prefer a gateway that can work with more than one acquirer.