Gateway, processor, acquirer, ISO — who actually does what.
The company whose name is on your statement, the company whose name is on your terminal, and the company who sold you the account are frequently three different companies. Knowing which is which is how you get a problem solved.
What this page settles.
Three questions, in the order most people ask them.
The five-second version
Acquirer — the bank that holds your merchant account and is ultimately liable for your transactions.
Processor — the company whose technology actually moves the transaction between you, the networks and the issuing banks.
Gateway — the connection between a non-terminal point of sale, such as a website, and the processor.
ISO or agent — the company or person who sold you the account and services it. Not a bank, not a processor.
Networks and issuers — Visa, Mastercard, Amex and Discover set the rules and the interchange; the issuer is your customer’s bank, which approves the transaction and keeps most of the interchange.
Most merchants have a relationship with the ISO, a statement from the processor, and no idea who the acquirer is. That is backwards from the point of view of getting anything fixed.
What happens in one transaction
A customer taps a card for $50 in your shop.
1. Capture. The terminal reads the chip and builds an authorization request. If the sale started on a website instead, the gateway does this job.
2. Routing. The processor receives the request and routes it to the right card network.
3. Authorization. The network passes it to the issuing bank, which checks the account, the balance, and its own fraud scoring, and returns an approval or a decline. This round trip takes a couple of seconds. Why transactions get declined.
4. Batch. At the end of your day you settle — you submit the day’s approved authorizations for payment. If this happens late, transactions can fall outside the authorization window and downgrade. Batch cutoff times.
5. Clearing and funding. The networks move the money from the issuers to your acquirer, less interchange and assessments. The acquirer deposits to your bank account, less whatever your pricing says it keeps. Funding times.
The ISO appears nowhere in those five steps. It appears in your pricing, your paperwork and your support calls.
The acquirer
The acquiring bank — also called the merchant bank or sponsor bank — is the registered member of the card networks that your merchant account actually lives under. Everything else in this list operates under somebody’s acquiring licence.
What the acquirer does that nobody else can:
Carries the risk. If you take $40,000 in card payments, fail to deliver, and disappear, the acquirer pays the chargebacks. That liability is why underwriting exists and why reserve accounts exist.
Holds the merchant account. Your MID — merchant identifier — is issued under the acquirer.
Makes the final call on funding holds. When money is held, the decision belongs to risk at the acquirer or its processor, regardless of who you talk to about it. Held funds and reserves.
You will rarely speak to the acquirer directly. You should still know its name, because it is the answer to “who is my merchant account actually with”, and it is usually printed somewhere on your statement in small type.
The processor
The processor runs the technical plumbing: authorization routing, settlement, clearing files, your statement, and usually the terminal software.
In practice the processor is the company whose system your account lives on and whose name is on the statement — the platform. A great many ISOs sell accounts on a handful of large processing platforms, which is why statements from very different-looking companies can look identical in layout: they are the same platform underneath.
Sometimes the acquirer and the processor are the same institution. Sometimes they are separate and the processor is sponsored by the acquirer. For your purposes the practical distinction is: the processor is who the technology problems belong to, and the acquirer is who the risk decisions belong to.
The gateway
A gateway is only needed when the transaction does not originate at a terminal wired to the processor.
You need one for a website checkout, a virtual terminal where you key cards from a browser, a recurring billing system, an app, or an invoicing tool that takes payment.
You generally do not for a standalone card terminal in a shop, which talks to the processor directly.
What a gateway does: takes card data securely, tokenizes it so you can store a card without storing a number, applies fraud screening rules, passes the transaction to the processor, and handles recurring billing schedules. Tokenization and P2PE.
Two things worth knowing commercially. First, gateways are often billed separately — a monthly fee and a per-transaction fee on top of processing — and that fee is frequently paid twice by merchants whose platform already includes one. Gateway fees. Second, an independent gateway is portable: if you change processors, an independent gateway can usually point at the new one, and your stored cards and integrations survive. A processor’s own gateway cannot, and that is a quiet form of lock-in.
The ISO or agent
An ISO — independent sales organization — is a company registered with the networks to sell and service merchant accounts on behalf of an acquirer. An agent is a person or small company doing the same thing, usually under an ISO.
What the ISO actually controls:
Your pricing. Within the band the processor allows, the markup over interchange is the ISO’s. This is why two merchants on the same processor can pay very different rates.
Your paperwork. Term, early termination fee, equipment lease, auto-renewal. These are in the ISO’s agreement.
Your service. Who you call, how fast they answer, whether they explain the statement.
What the ISO does not control: underwriting, funding, risk holds, interchange, or the rules.
This is not a criticism of the model. A good ISO is a genuinely useful thing to have — someone who knows your account, reads your statement with you, and escalates properly. A bad one is a salesperson who sold you a four-year lease and stopped answering. The structure allows both, which is why it pays to know which you have.
For the record: we are an ISO. We board merchants on platforms including CardConnect, Maverick, NRS and Payarc, and we are compensated on the accounts we place. You should assume the same of anyone else quoting you, and ask what they are not telling you.
Why this matters when something breaks
The practical payoff is knowing who to call.
Terminal will not connect, batch failed, software error — processor, through whoever services you.
Rate looks wrong, fee you do not recognise, contract question — ISO. They wrote it.
Funds held, account under review, reserve imposed — risk, at the acquirer or processor. Your ISO escalates; they do not decide.
Chargeback — the process runs through the processor on a network timetable. Your ISO can help you build the response, but the deadlines are the network’s. How to fight a chargeback.
Interchange changed in April or October — nobody you can call. The networks publish those twice a year and everyone passes them through. Why your bill went up.
Half the frustration in this industry is merchants spending three weeks asking the wrong party for something they cannot give.
What we charge
Interchange + 0.50% + 10¢ in person, interchange + 0.75% + 25¢ keyed, with no contract, no monthly fee and no monthly minimum.
If you are not sure who is who on your own account, send us a statement. We can usually name the acquirer, the platform and the selling ISO from the page, and knowing that is useful to you whether or not you ever move.
While we are on the subject
Is my ISO my processor?
Usually not. An ISO sells and services merchant accounts that sit on someone else’s processing platform and someone else’s acquiring bank. Your statement often names all three if you know where to look.
Do I need a gateway for a card reader in a shop?
Generally no. A terminal that connects directly to the processor does not need one. You need a gateway when a transaction starts somewhere that is not a terminal, like a website or a virtual terminal.
Who do I call about a hold on my funds?
The risk department at the acquirer or processor, usually reached through whoever services your account. Your ISO can escalate but cannot release funds themselves.
Can I keep my gateway and change processor?
Often yes, if the gateway is independent rather than a processor’s own. That portability is worth something and is one reason to prefer an independent gateway.