THE GUIDE · THE BUILDER SIDE

The other half of the swipe.

Issuing hands out cards; acquiring lets a business accept them. This is the getting-paid side: onboarding and underwriting a merchant, moving the money in, and carrying the risk that a shop disappears before its refunds clear.

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PART 01

How a business gets paid — and who carries the risk.

Step through onboarding, settlement, a chargeback, and the exact reason acquirers hold reserves.

PART 02

The acquiring side, up close.

The mirror image of issuing — who onboards the merchant, moves the money, and eats the risk.

THE ACQUIRING SIDE

"Issuing, in a mirror."

Acquiring is the merchant's side of the four-party model: the acquirer signs up sellers, connects them to the networks, moves the settlement money in, and carries the merchant risk. Everything issuing does for cardholders, acquiring does for shops.

MERCHANT UNDERWRITING

"Underwrite the seller, not the buyer."

Before boarding a merchant: KYB (Know Your Business), beneficial ownership, credit and fraud checks, and a read on the business model. High-risk verticals (travel, supplements, adult, crypto, anything with delivery lag) get reserves or declines — because the risk is the merchant failing to deliver.

MoR vs PayFac vs ISO

"Who is legally the merchant?"

Three models. A Merchant of Record takes on the sale (and its tax and compliance) as principal. A PayFac aggregates many sub-merchants under its own master account. An ISO (Independent Sales Organization) just refers merchants to an acquirer. The difference is who holds the licence, the funds and the liability.

THE MERCHANT DISCOUNT

"Three fees in a trench coat."

What a merchant 'pays to accept cards' is three stacked layers: interchange (to the issuer), scheme fees (to the network), and the acquirer's markup. Pricing can be transparent (interchange-plus) or opaque (blended or tiered) — the receipt below unstacks it.

RESERVES & CLAWBACKS

"Money held against tomorrow's refunds."

A rolling reserve holds back a slice of each payout to cover future chargebacks. When a dispute lands, the acquirer claws it from the merchant's balance. Reserves are the acquirer's insurance against a merchant that takes money and can't — or won't — make good.

MARKETPLACES & SPLIT

"One checkout, many sellers."

Ride-shares and marketplaces must pay many sub-merchants from one transaction. Split payments and payout APIs (the Stripe Connect model) handle the fan-out, the sub-merchant KYB, and the tax reporting — turning the platform itself into a mini-acquirer.

PART 03

Unstacking the merchant discount.

The same $100 sale, written the way the acquirer's statement records it.

MERCHANT STATEMENT
ONE $100 CARD SALE · REWARDS CREDIT
Gross sale$100.00
− Interchange (to issuer)−$1.80
− Scheme / assessment (to network)−$0.13
− Acquirer markup−$0.30
Net to merchant$97.77
effective rate 2.23%
Illustrative US rewards-credit sale, interchange-plus pricing. Regulated debit would net ~$99.50; a blended or tiered plan hides these three layers behind one number.
FIELD NOTES — THE PRO LAYER

For the professionals.

The acquiring side up close — the three merchant models, the vanishing-merchant risk, pricing, marketplaces, and the 2025 interchange settlement.

MoR vs PayFac vs ISO — THE LIABILITY DECOMPOSITION
The three models differ in who holds what. A Merchant of Record (many SaaS and marketplace 'seller of record' setups) becomes principal in the sale — owning sales-tax/VAT, refunds and compliance, and letting the real seller ignore all of it. A PayFac holds a master merchant account and onboards sub-merchants under it, taking on their underwriting and funding (Square, Stripe, Toast). An ISO merely resells an acquirer's service and refers merchants, holding little risk. Choosing among them is really choosing how much licence, funds-flow and liability to carry.
UNDERWRITING THE 'MERCHANT VANISHES' RISK
Card acquiring's defining risk isn't the buyer. It's the seller failing to deliver. A travel agency or furniture shop takes payment now for goods weeks away; if it folds, every customer files a chargeback and the acquirer, not the vanished merchant, owes the networks. So acquirers underwrite the business (KYB, financials, delivery lag, refund history), price high-risk verticals higher, and hold reserves. It's the same discipline the Underwriting Desk game makes you feel — approve growth without boarding a time bomb.
PRICING — INTERCHANGE-PLUS vs BLENDED vs TIERED
Interchange-plus passes through the real interchange + scheme fee and adds a transparent markup — the honest, auditable model. Blended charges one flat rate regardless of card type (simple, but the processor keeps the spread on cheap cards). Tiered ('qualified / mid / non-qualified') is the murkiest — the processor decides which bucket each transaction lands in. Add least-cost routing on debit (a Durbin gift) and 'what do you pay to accept cards' becomes a genuinely hard question — exactly what the fee calculator and benchmark tools exist to answer.
MARKETPLACES, SPLIT PAYMENTS & PAYOUTS
When one checkout must pay many sellers, the platform needs split payments and payouts. The Stripe Connect model lets a platform onboard sub-merchants (with their KYB), take its cut, disburse the rest, and handle 1099-K/tax reporting. Economically the platform becomes a mini-PayFac, which is why 'payfac-as-a-service' exists — the acquiring stack, rented, so a software company can embed payments without becoming a payments company.
THE 2025 US INTERCHANGE SETTLEMENT
After roughly 20 years of litigation, Visa and Mastercard announced a ~$200B settlement with US merchants on 10 Nov 2025: modest posted-rate cuts, a temporary cap on standard consumer-credit interchange, and — the bigger deal — expanded rights to surcharge and to steer customers toward cheaper cards. It is not yet court-approved (final approval expected in 2026, and merchant groups are split), so treat the numbers as provisional. If it holds, it nudges the merchant discount down and hands merchants new routing and surcharging leverage — reshaping the economics this whole chapter describes.
PART 04

Remember three things.

1
Issuing and acquiring are mirror images — one side hands out cards, the other lets businesses accept them and moves the money in.
2
The acquirer's real risk is a merchant that vanishes before its chargebacks clear — which is why underwriting, rolling reserves and high-risk pricing exist at all.
3
The merchant discount is three stacked fees — interchange, scheme, markup — and the choice of MoR vs PayFac vs ISO decides who owns the licence, the funds and the tax.
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