In a card transaction, who processes the settlement and transfers funds to the merchant?

In a card transaction, who processes the settlement and transfers funds to the merchant?

• A. Acquirer
• B. Issuer
• C. Cardholder
• D. Card network

Answer: (A)

The settlement is handled by the acquirer—the merchant’s bank or payment processor. After you swipe or enter your card, the issuer (the cardholder’s bank) authorizes the transaction and funds are routed through the card network to the acquirer. The acquirer then settles with the issuer and ultimately credits the merchant’s account, completing the transfer of funds to the merchant. The issuer approves and funds the transaction, but the actual cash flow to the merchant goes through the acquirer. The card network facilitates the messaging and the transfer, but it doesn’t deposit funds to the merchant.

The settlement is handled by the acquirer—the merchant’s bank or payment processor. After you swipe or enter your card, the issuer (the cardholder’s bank) authorizes the transaction and funds are routed through the card network to the acquirer. The acquirer then settles with the issuer and ultimately credits the merchant’s account, completing the transfer of funds to the merchant. The issuer approves and funds the transaction, but the actual cash flow to the merchant goes through the acquirer. The card network facilitates the messaging and the transfer, but it doesn’t deposit funds to the merchant.