Concepts of Acquirer, Processor, Gateway

People often tend to confuse the concepts of acquirer, payment processor, and payment gateway. A merchant acquirer or an acquiring bank is a bank that underwrites (and later funds) a merchant and (what is important) assumes the liability and risk, associated with credit card fraud and chargebacks. A payment processor handles the technical aspects of transaction processing and is connected to the banking system through the respective acquiring partner. A payment gateway is a technical platform lies between merchants and processors. Merchants can get access to several processors through a single payment gateway. Recently, the situation has become even more confusing as many entities started providing different kinds of services (acquiring services, merchant services, processing services, gateway services) “all in one”. Payment facilitator, a relatively new kind of entity, participates in merchant funding process, and large payment gateways often become acquirers. Some PayFacs and gateways assume part of the listed risks in exchange for better terms of acquiring partnership (residual revenue sharing). However, traditionally, some credit card acquirer always stands behind a payment facilitator or gateway. If you want to learn more about who is who in merchant services industry, you are welcome to read our respective article on Paylosophy blog.