Merchant Accounts
The acquiring bank contract with the merchant is a merchant account. The arrangement is actually a line of credit and not a bank account. Under the agreement, the acquiring bank exchanges funds with issuing banks on behalf of the merchant, and pays the merchant for the net balance of their daily payment card activity: gross sales minus reversals, interchange fees, and acquirer fees.
Interchange fees are fixed rates set by the card association, varying by the merchant's industry, as reflected in their SIC codes. Acquirer fees are an additional markup added to association Interchange fees by the acquiring bank, varying at the acquirer's discretion.
Read more about this topic: Acquiring Bank
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