> For the complete documentation index, see [llms.txt](https://dianadarie.gitbook.io/system-design-notes/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://dianadarie.gitbook.io/system-design-notes/payments-services/parties-acquirer-issuer.md).

# Parties: Acquirer, Issuer

## **Acquirer** (merchant acquirer or acquiring bank) 

* \= the financial institution that handles your merchant account so you can accept credit or debit cards.
* roles:
  * **Merchant Accounts Maintenance** - your acquirer will offer and maintain your merchant account, setting rules and requirements and recording and maintaining account activity e.g. deposits and withdrawals.
  * **Authorization requests:** When a customer pays by card, the acquirer receives the information from the card issuer and then forwards any authorization requests.
  * **Settlement:** When the transaction is cleared and processed, the acquirer receives the funds, pays the card issuer the associated interchange fee and deposits the remaining funds into your account.

## **Issuer** (issuing bank) 

* \= customer facing part of the payment chain and is the bank that issues the credit or debit card.
* members of the card scheme, such as Visa and Mastercard, but they can also operate as both issuer and card scheme as in the case of Amex.
* roles:
  * **Issuing cards:** As their name suggests, an issuer handles card applications and issues users with a payment card.
  * **Running accounts:** They also offer and maintain the debit or credit accounts, setting card spend limits, recording transactions, issuing statements, taking repayments and monitoring for fraud.
  * **Card authorization:** Issuers manage the ID and security processes and authenticate transactions, receiving and sending data to the relevant card schemes and payment gateways to approve or decline cardholder transactions.
  * **Releasing funds:** Once a transaction is approved, the issuer releases the funds to the merchant’s acquiring bank.
  * **Rewards:** Many issuers also allow consumers to earn loyalty points or cashback from purchases made with payment cards.

<figure><img src="https://2798622988-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FSvyZbTXexnOjgYP5Qq4a%2Fuploads%2F56exAUQXnwhd3cLmiDIW%2FDiana%20Playground%20(15).jpg?alt=media&amp;token=33626c80-6f5d-4413-b6f8-7fd72e219627" alt=""><figcaption></figcaption></figure>

Resources:

* [Acquirer vs Issuer: Understanding the difference](https://www.checkout.com/resources/blog/acquirer-vs-issuer)