Everything you need to know about payments processing.

Issuers (also known as issuing banks or card issuers) represent the customer in a transaction. They may be a bank, credit union, or other financial institution. They maintain debit and credit accounts, provide payment cards, and assess financial risk. They approve or decline transactions and handle chargebacks. 

While companies like Visa, Mastercard, and American Express provide the networks that process transactions, they are not issuers. The issuer takes on the risk of issuing credit, assessing a person’s financial history before approving a line of credit. If the cardholder does not pay their balance within the required period, the issuer collects interest on the outstanding amount. Issuers also manage chargebacks—when a customer disputes a transaction and requests a refund. They assess whether the request is valid, though their decision can still be challenged by other parties. 

Acquirers (also called acquiring banks) represent the business. They enable merchants to accept payments by processing transactions and ensuring that funds are deposited into the business’s account. Acquirers keep records of transactions, forward authorisation requests to card networks, and assign unique merchant IDs for communication with payment networks. 
 

Acquirers are responsible for ensuring businesses meet security standards, such as those set by the Payment Card Industry Data Security Standard (PCI DSS). In the event of a chargeback, the acquirer repays the issuer, who then refunds the customer. Many acquirers maintain a reserve account for chargeback costs or offer a credit line to businesses to cover potential losses. If a business goes bankrupt, the acquirer is often left to absorb the loss, which is why they conduct rigorous risk assessments before onboarding merchants.

Another important player in the payment process is the issuer processor. Acting on behalf of the issuer, an issuer processor facilitates transaction authorisation, data security, and payment flows between banks and merchants. Some acquirers also function as processors, streamlining payments for businesses by offering end-to-end solutions.