In the clearing and settlement phase, what does the acquirer do?

In the clearing and settlement phase, the acquirer plays a crucial role by sending batch transactions through the card brand for settlement. This process involves collecting payment information from the merchant, compiling it into batches, and then securely transmitting these batches to the card networks (such as Visa, MasterCard, etc.) for processing. Once the card networks receive these batches, they facilitate the transfer of funds from the issuing banks (the banks that issued the credit cards) to the acquirers (the banks or financial institutions that process payments on behalf of the merchants).

This step is vital because it ensures the payment process is streamlined and that funds are allocated correctly. By sending the batches for settlement, the acquirer is effectively managing the financial connection between the merchants and the card issuers, enabling the completion of transactions that were initiated during the authorization phase. This overall process ultimately results in the timely payment to the merchant for the sales they have processed.