A company is an acquirer if it obtains rights to another company or business relationship by way of a deal. These deals can be mergers and acquisitions but also other structured agreements. Acquirers purchase large amounts of the stock of the target company to buy them out and take control of their ownership.
Commonly, acquirers also financial institution who acquire the rights for merchant accounts that allow them to manage customer electronic payments.
Understanding the Acquirer
There are many reasons why a company might be interested in buying another company. This could include lower competition, creation of synergies and access to a new marketplace.
The type of deal that is in place can affect the types of acquirer relationships. Corporations may acquire another company by entering into a deal that allows them to pay a set price to purchase the rights to another company and integrate it into their business operations. This could be a cash purchase or purchase of stock.
Although an acquisition is generally agreed upon by both parties, it can sometimes be unilateral. An acquisition is a hostile Takeover. The target company will usually use procedures to avoid being acquired such as using a poison tablet.
An acquirer is a partner in electronic payments transactions or deposit processing.
A retail store selling clothing might want to establish an electronic payment system to allow customers to pay electronically via credit cards or by phone. A merchant acquirer (also known as a merchant banking) would be hired by the retailer to take control of the merchant account and accept customer payments.
Types of Acquirers
Corporate Acquisition
The acquirer is the company that purchases another company at a specific price. Two parties usually agree on corporate acquisitions. They enable an acquiring company take full control of a business and to integrate it into their existing business.
The acquiring company believes they can make a profit by buying another company, absorbing their valuable components and discontinuing the unproductive. It also believes that it is improving the company it buys.
Acquisitions of public corporations will often result in a stock price drop for the acquirer when they purchase a company. This is often due to uncertainty in the transaction and the premium the acquirer has paid for the purchase.
Merchant Acquirer
The merchant acquirer agreement serves as a third party partner to the merchant. To process electronic transactions and receive payments electronically, merchants need to partner with a financial institution.
A merchant acquirer is a bank service provider that manages electronic funds from clients who pay to a merchant accounts. A merchant acquirer is also known as a Settlement Bank because they facilitate settlement and communication of merchant payments.
For processing and settlement, contact the merchant acquirer every time a credit card or debit is used to make payment. The merchant acquirer might dictate which types of payments are allowed.
Acquirers generally have processing relationships with a number of providers. This usually includes major processors like Visa, Mastercard and American Express. Merchant acquirers might only be able to process branded cards with one processor. This may restrict the number of branded cards that the merchant is allowed to accept.
A merchant will be charged a different fee by an acquirer, which is detailed in the agreement. Most acquirers will charge merchants a per transaction fee and a monthly fee. Per-transaction fees are paid by the acquirer to cover network processing costs. You may also have to pay monthly fees for certain services.
