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What is a merchant acquiring entity?

Often called an “acquiring” or “merchant” bank, a merchant acquiring entity is the bank or other organization that has the contractual obligation to make payment to a merchant or other business, known as a “participating payee,” in settlement of payment card transactions. Under Treasury regulations section 1.6050W-1, a merchant acquiring entity makes payment in settlement of a payment card transaction if it submits the instruction to transfer funds to the participating payee’s account.

For additional information see the IRS Payment Card Transactions FAQs