Acquiring Bank

Bank acquiring credit card payment_CardinalCommerceAs a merchant, you need to open a merchant account with an acquiring bank if you want to accept and process credit card payments from consumers. The information provided here can help reduce the risk of chargebacks and will put merchants at ease when dealing with their acquiring banks. 

What is a Chargeback?

There are many different kinds of chargebacks. Oftentimes, a chargeback occurs when a consumer is so dissatisfied with a product or service they purchased that they contact their bank or credit card company so that they can be compensated for the full price of the product or service. This process is carried out by retrieving the consumer’s stated loss from the acquiring bank’s merchant account. There are many regulations in place to prevent consumers from taking advantage of this system but, inevitably, there are loopholes in the process, giving dishonest consumers the ability to cheat the system.

How Chargebacks Affect the Merchant

Chargebacks are an unneeded expense for the acquiring bank, issuing bank and especially, the merchant. Acquiring banks will charge the merchant steep penalties, as high as $2.40 per $1.00 lost, per chargeback. If a merchant receives too many chargebacks, the acquiring bank will close that line of credit, and that merchant will no longer be able to accept credit cards as a payment method. 

Prevent Chargebacks

As a merchant, you need to take the necessary steps to reduce the risk of chargebacks. If you don’t, you risk losing your merchant account with the acquiring bank, and not being able to accept credit cards on your website. Some of these chargeback prevention steps include:

  • Document and keep records of all credit card orders
  • Work directly with the consumer to resolve any issues with a transaction
  • Act quickly to resolve any consumer complaints
  • When a chargeback is issued, provide accurate and necessary information


Opening a merchant account through an acquiring bank is a necessary step for most businesses. If you monitor your chargebacks properly, you will prevent problems with your acquiring bank. It’s important that you, as the merchant, maintain an open line of communication with your buyers and your acquiring bank, so that you can effectively reduce the risk of chargebacks.

Back to Chargebacks

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