The changing role of merchant acquiring in payments

As a business owner, you’ll already be familiar with the world of online payments and credit and debit card transactions. Also, when you look to expand your business globally, payment is undoubtedly one of the most crucial buying process steps. Convenient payment methods not only enhance customer experience, they also help drive growth in international markets. For your customer, a transaction requires a simple tap of their card and it is complete in seconds. But behind every payment is a complex communication between financial institutions, all made possible through the acquirer. If a transaction doesn’t go through, it’s your acquirer that tells you why and helps you solve any issues.

An acquiring landscape snapshot

The past two years or so have signalled a period of transformation across the acquiring sector. 2021 saw the introduction of a contactless card limit increase from £45 to £100, in the UK. This in turn saw a significant increase in contactless transactions, rising from 7% to 27%  of total payments. As a result, cashless habits have changed forever with many of those who were previously uncomfortable using contactless payments leaving their wallet at home.

In addition, the Payments Systems Regulator (PSR) mandated a set of regulatory changes as of January this year, essentially with a view to allowing merchants to change their acquirer more easily. Amongst the changes that the PSR introduced were measures to eradicate the major, existing acquiring pain points. These included:

• New rules around making prices more transparent for merchants.
• The deployment of trigger messages on display screens to prompt merchants to shop around
• The eradication of long-term contracts that saw merchants tied into lengthy deals that were difficult to terminate

As 2023 progresses, we are already seeing an increase in merchants looking to switch acquirers as they become more aware of what to look for and how to negotiate the best acquirer rate deals for them. Whilst these changes are primarily focused on benefitting merchants, naturally, there is also a trickle-down effect to the end consumer. In other words, the better value for money the merchant gets, the better the end result for the customer.

À la carte and acquiring internationally

Traditionally, the acquiring market has been somewhat fragmented, with local payment options differing dramatically between countries - merchants have the option of choosing between:

• Local acquirers – typically banks offering strong domestic footprint and capabilities within their own market and competitive prices
• International acquirers - offering better coverage of international payments, across more countries but at a significantly higher price

Whilst partnering with local acquirers means access to local schemes providing cheaper rates it also entails increased back-office costs and complexity in negotiating acquirer contracts, among other challenges. Complexity further arises with merchants having to balance and manage multiple contracts with multiple acquirers, which can be distracting and costly. À la carte acquiring allows merchants a route out of this complexity, through a bespoke solution. This offers the best combination of acquirers, depending on their needs, through one omnichannel gateway. As a result, merchants are connected to a host of local acquirers, enabling them to access both local schemes and pricing whilst allowing merchants to extend their reach with an international acquirer.

The gateway’s smart routing system therefore allows for transactions to be sent to the most relevant acquirer, based on the parameters agreed with the merchant. So, transactions from both local and central acquiring are reconciled into the gateway’s reporting features.

Using à la carte acquiring enables merchants to optimise their acquiring solution to their business needs and ensures they minimise any risk of excessive acquiring costs. It also enables domestic merchants to accept a broader range of payments, ultimately enhancing bottom line growth potential.

By following this acquiring model, merchants can make significant operational savings in the long term as it encourages a more focused approach to allocating resources to the most important areas of the business.

À la carte acquiring has gained traction in recent years in the sense that merchants are now – more than ever - demanding a smarter, more efficient way of processing transactions and saving on time and cost.

Your acquirer makes payments possible

Your acquirer is the driving force behind the processing of payments for your merchant business. It secures the payments you are due by driving transactions through the transaction flow, in mere seconds – so it’s important to ensure you select the right partner who can offer comprehensive solutions, across all the markets in which you operate.

We offer extensive geographical coverage across the UK and Europe, process international cards as well as numerous alternative payments with the option to settle in 21 different currencies and acceptance in 160 countries.

Discover more about our acquiring services by downloading our white paper.