Acquiring Bank

The acquiring bank is also referred to as a merchant bank. An acquiring bank is the bank or financial institution that actually pays a merchant for credit card sales and bank card transactions. The acquiring bank buys credit card sales from a merchant, and is reimbursed for the transactions by the issuing bank.

The acquiring bank deposits funds from credit card sales in to the merchant's direct deposit account (DDA), and relies on the issuing bank to reimburse them for such deposits. In turn the issuing bank relies on the cardholder to reimburse them for the original purchase.

The acquiring bank is the first-level player in the credit card processing equation. They have the most at risk if a transaction goes bad.