Short answer
An acquirer holds the merchant account and settles money to the business. An ISO is a reseller registered to sell an acquirer's services. A payment facilitator (payfac) signs up many small merchants under its own master account. A gateway securely passes card details online, and a payment service provider (PSP) often bundles several of these. Which you deal with decides your pricing, contract and risk.
Part of How payments work. Start with the main guide: How a card payment works: authorisation, clearing and settlement
Key takeaways
- An acquirer provides the merchant account and settles funds. An ISO sells that service on the acquirer's behalf.
- A payment facilitator signs up merchants under its own account, which is quick but gives you less control.
- A gateway passes card data between a website or terminal and the processor. It is not the same as an acquirer.
- Many companies combine roles, so the brand you see may not be the one holding your money.
- Knowing who does what helps you read a statement, find the right person to call and compare quotes fairly.
A merchant statement carries a brand name at the top. That brand is rarely the whole story. Behind it there may be a bank that holds the merchant account, a reseller that sold it, a company that provides the terminal and another that handles the online connection. Each one takes a share, and each one has a different role.
This guide explains the main players in plain terms: acquirer, ISO, payment facilitator, gateway and payment service provider. It shows how they fit together, how each tends to charge and how to tell who you are dealing with. It is general information. The exact definitions and the rules that apply to each differ between countries and card networks.
What is the short version?
| Player | What it does | Who it serves | Typical contract |
|---|---|---|---|
| Acquirer | Holds the merchant account, receives funds from the networks and settles them to the merchant | Merchants, directly or through resellers | A merchant agreement, often with a term |
| ISO (independent sales organisation) | Sells and supports an acquirer's services, signing up merchants | Merchants | Often with the acquirer's terms, plus its own |
| Payment facilitator (payfac) | Signs up many merchants under its own master merchant account | Small and online merchants | Usually simple, with no or short term |
| Payment gateway | Securely carries card details between a website or terminal and the processor | Online and card-not-present merchants | Often a monthly fee plus per-transaction charge |
| Payment service provider (PSP) | A broad term for a company that bundles several of the above | Merchants of many sizes | Varies |
| Processor | Handles the technical routing of transactions for acquirers | Acquirers and large merchants | Mostly invisible to small merchants |
What is an acquirer?
In the chain described in how a card payment works, the acquirer is the merchant's side of the transaction. It carries financial and regulatory responsibilities: checking merchants, monitoring risk and keeping to card network rules. Because of that, an acquirer usually reviews and approves each merchant, which is why applications involve identity and business checks.
Many merchants never deal with an acquirer directly. They deal with a reseller or PSP that has a relationship with one.
What is an ISO?
An ISO may offer its own branding, pricing and terminal options on top of the acquirer's services. A merchant who signs with an ISO usually has an agreement with both: the ISO for service and the acquirer for the merchant account, even if it is presented as one document. Agents and consultants often work for or through an ISO, as explained in ISOs, agents and residuals.
How does a payment facilitator work?
The payfac model makes sign-up quick, often a few minutes, because the facilitator carries the risk and checks. It suits small and online merchants. The trade-offs are less control, flat or blended pricing and the possibility that funds are held or an account frozen if the facilitator sees risk. Many pay-as-you-go card readers and online platforms work this way.
What is a payment gateway?
A gateway is the digital equivalent of the card terminal for online and phone payments. It encrypts card details and returns the approval. Gateways typically charge a monthly fee and a per-transaction fee, which is why they appear as a separate line on a statement. They are a different thing from an acquirer: a merchant can have a gateway from one company and a merchant account from another. See authorisation and per-transaction fees.
What are a PSP and a processor?
"Payment service provider" is a broad term for a company that provides several of these functions in one package, such as a gateway, a merchant account arrangement and sometimes terminals. Many well-known payment brands are PSPs, and some are also payfacs. The label tells you less than the structure: ask who holds the merchant account and who settles your money.
A processor is the technical engine that routes transactions between the merchant side and the card networks. Small merchants rarely deal with one directly.
How do they fit together?
The roles can be stacked in different ways. A simple picture:
- The merchantTakes payments with a terminal, website or app.
- Reseller, ISO or PSPThe brand on the statement. Sells the service and handles support.
- Gateway and processorCarry the transaction data securely and route it.
- AcquirerHolds the merchant account and settles to the merchant.
- Card network and issuerApprove the payment and fund it.
Roles may be combined. The merchant often sees only the top one.
In one arrangement, a single company is all of the middle layers. In another, they are separate companies, each with a fee.
Why does it matter to the merchant?
Pricing
The more layers, the more margins. An ISO's or PSP's markup sits on top of the acquirer's, which sits on top of interchange and scheme fees. See acquirer markup explained. A payfac usually charges a flat or blended rate that covers everything. A merchant with a direct acquirer relationship may be on interchange plus. See interchange plus, blended and flat rate.
Contracts and exit
Contracts differ. An ISO deal may have an acquirer agreement and an ISO agreement. A payfac has simple terms but may hold funds. Our guides to cancelling a contract and double contracts explain what to check.
Risk and control
A merchant account of your own gives you control and a direct relationship, with more checks at sign-up. A payfac sub-merchant relationship is easier to get but gives you less control, and the facilitator can pause payouts.
Who to call
When something goes wrong, you need to know who to call. A failed terminal is usually the hardware or ISO's job. A held payout is the payfac's or acquirer's. A gateway error is the gateway's. A statement query goes to whoever issued the statement.
How do you find out who you deal with?
Check your contract and statement for:
- The name of the acquirer or bank, often in small print
- The name of the company that issued the statement
- Who bills the terminal, and whether it is a separate company
- The name and contact for support
- Whether you have your own merchant ID or are a sub-merchant
- Who settles the funds to your bank account
If it is unclear, ask your provider in writing: "Who holds my merchant account, and who is responsible for each part of the service?"
- Whose name is on the statement?That is the brand. It may be a reseller or PSP, not the bank.
- Who holds the merchant account?The acquirer. Look in the contract or ask in writing.
- Do you have your own merchant ID?If yes, you probably have a direct merchant account. If not, you may be a sub-merchant.
- Who settles money to your bank?The party responsible if a payout is late or held.
- Who bills the terminal and gateway?They may be different companies with different contracts.
A few questions that usually settle it.
For consultants
Understanding the stack is part of the job. When you compare a payfac's flat rate with an acquirer's interchange plus, you are comparing different structures with different risks, not just different prices. Be clear with merchants about what each arrangement gives and takes. The checkmyrates calculator compares costs line by line whatever the structure, so you can show the merchant the difference in pounds.
Frequently asked questions
What is the difference between an acquirer and an ISO?
An acquirer holds the merchant account and settles funds. An ISO is a reseller registered to sell and support the acquirer's services. The ISO is not the bank.
What is a payment facilitator?
A company that holds a master merchant account and signs up many small merchants under it. Sign-up is fast, and you have less control than with your own merchant account.
Is a payment gateway the same as a merchant account?
No. A gateway securely passes card details to the processor. A merchant account, provided through an acquirer, is where the money is received and settled.
What is a PSP?
A payment service provider, a broad term for a company that bundles services such as a gateway, a merchant account arrangement and terminals.
How do I find out who holds my merchant account?
Check your contract and statement for the acquirer's name, or ask your provider in writing who holds the account and who settles your funds.
Why are there so many layers in payments?
Because each layer handles a specific function, such as sales, technology, risk or settlement, and each takes a fee. Smaller merchants often buy several layers in one package.
Sources and further reading
Figures in this guide are examples to show the method. Fees, rules and rates change, so check your own statement, contract and current rules before you decide. This is general information, not financial or legal advice.