Definition
In the four-corner model of card payments, two symmetrical banking roles structure each transaction:
- The issuer issues the card and provides it to the cardholder. It holds the payer's account, authorises or declines transactions, and collects the interchange.
- The acquirer contracts with the merchant to enable it to accept the card. It receives the funds, passes them on to the merchant, pays the interchange to the issuer and collects the MDR.
Both roles are regulated: being an issuer or an acquirer requires a credit-institution (CI) or EMI status, plus membership of the schemes (Visa, Mastercard, CB).
How a transaction works
When you pay €50 at a merchant:
- The merchant presents the card to its card terminal or acquiring PSP.
- The PSP/acquirer sends an authorisation request to the scheme (Visa, Mastercard, CB).
- The scheme routes it to the issuing bank.
- The issuer checks the balance, applies its anti-fraud logic, then authorises or declines.
- The response travels back along the same path and the merchant completes the sale.
- 24 to 48 hours later: settlement between acquirer and issuer through the scheme.
- The merchant receives €50 − MDR, the issuer debits €50 from the cardholder, and the interchange flows from the acquirer to the issuer.
The economics of the model
The MDR (Merchant Discount Rate) paid by the merchant — typically 0.5% to 2.5% on an EEA card — breaks down into three parts:
- Interchange (~60-70% of the MDR in the EEA): paid by the acquirer to the issuer.
- Scheme fees (~5-15%): paid by both sides to the scheme.
- Acquirer fee (~20-35%): the acquiring PSP's commercial margin.
It is the interchange collected on each transaction that funds, on the issuing side, free cards, cashback and the air miles of premium cards.
Issuing business vs acquiring business
| Issuer | Acquirer | |
|---|---|---|
| Customer | Individual / business cardholder | Merchant |
| Revenue | Interchange + card fees | MDR (acquiring margin) |
| Key risk | Cardholder fraud, payment default | Merchant fraud, chargeback |
| Skills | Banking UX, balance management, loyalty | Terminal / e-commerce integration, anti-fraud, KYB |
| Typical players | CI banks, neobanks (via EMI) | Acquiring PSPs (Stripe, Adyen, Worldline) |
In BaaS, the major players (Treezor, Swan, Marqeta) mainly handle issuing; the acquiring PSPs (Stripe, Adyen, Mollie) handle acquiring.
A special case: "three-corner" players
Amex, Discover and JCB are proprietary schemes: they are simultaneously issuer and acquirer. No interchange (it's the same player), but a higher MDR (1.8% to 3.5% at Amex in France). A more profitable model for the scheme, but with lower acceptance — many French merchants refuse Amex for this reason.
Common confusions
- Acquirer ≠ acquiring PSP: the regulatory acquirer is the CI/EMI that holds the scheme contract; the acquiring PSP (Stripe, Mollie) is often a commercial layer on top. Stripe is an acquirer in its own right in some countries, and a partner of acquirers in others.
- Issuer ≠ my current-account bank: for a Lydia or Vivid prepaid card, the issuer is the EMI (or a BIN sponsor), not your main bank.
- Credit card ≠ debit card: higher interchange on credit, and different IFR caps for the two.
In the PSD2 ecosystem
The issuer carries the SCA on the cardholder's side through its ACS in 3DS2. The acquirer and its PSP handle the SCA request in the message and apply the exemptions. The liability shift transfers fraud liability to the issuer as soon as 3DS2 has been used — the major economic incentive that drives acquirers to deploy it.
Concrete examples
- Traditional FR issuers: BNP, Crédit Agricole, Société Générale, BPCE and Crédit Mutuel issue tens of millions of cards co-badged CB + Visa/MC.
- Neobank issuers: Boursorama, Hello Bank, Revolut, N26, Lydia/Sumeria — often via a BaaS (Treezor for many) or their own EMI.
- Traditional FR acquirers: Worldline/Atos (the historic leader), Crédit Agricole, BNP Cash Management and Société Générale handle merchant contracts directly.
- Modern acquiring PSPs: Stripe, Adyen, Mollie, Checkout.com, PayPal Braintree — commercial aggregators licensed as acquirers in the EEA (Stripe in Ireland since 2018).
- Apple Pay: Apple is a wallet, not an issuer. The card is still issued by your bank; Apple collects a fee from the issuer (~0.15% in the US).
- BNPL (Klarna, Alma): alternative acquirers to the card — the merchant pays an MDR of 2% to 6%, more expensive, but offloads the default risk.
- Margin differential: in Europe, acquirer margins have compressed (PSP competition) while issuer margins remain comfortable (interchange + marketing) — hence the push of BaaS into card issuing.