À la carte acquiring is offering merchants a much-needed, bespoke solution, and is part of a rapid evolution in the payments sector. Traditionally, the acquiring market has segmented allowing merchants two types of acquirers - local and international. Local acquirers are usually banks.
Both present their own benefits and challenges, which makes deciding on the most appropriate option difficult for many merchants. However, they are now able to consider the à la carte option as a suitable alternative, as it combines both local and international acquiring and is designed to reduce costs while boosting visibility and management.
It does, indeed, combine the best of both worlds.
The importance of choice
Across Europe the acquiring market is fragmented, with local payment options differing significantly between countries. When it comes to acquiring, merchants may choose local acquirers, which tend to have a strong domestic footprint and capabilities within their own market. They also usually offer the most competitive prices.
Nevertheless, their reach outside the domestic market is weak and if merchants were to opt for this route and expand into new countries, negotiating and building relationships with numerous acquirers may be necessary. It is also difficult and time-consuming and adds operational limitations.
This ultimately can increase the time-to-market, which risks the possibility that competitors will establish themselves quicker in a country or region than the merchant, hence beating them to increase market share.
Conversely, international acquirers may be more expensive whilst in turn offering better coverage of international payments. These could include UPI, JCB, Alipay, WeChat Pay etc. They may also be able to cover multiple countries with the same offer. However, smaller merchants looking to expand internationally may, understandably, be unable to cover these increased costs and are facing a Catch-22 situation.
Partnering with local acquirers means access to local schemes providing cheaper rates, but 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.
The best of both worlds
À la carte acquiring allows merchants a route out of this issue as it offers them the best combination of acquirers, depending on their needs, through a single omnichannel gateway. This concept connects merchants to a host of local acquirers, enabling them to access both local schemes and pricing. It also allows to connect merchants to an international acquirer with a broader reach.
As a result of the gateway’s smart routing system, transactions are sent to the most relevant acquirer based on the parameters agreed with the merchant, which would have also been in touch with the acquirer.
Indeed, transactions from both local and central acquiring are reconciled into the gateway’s reporting features. We are proud, through our own acquiring solution at Worldline, to have more than 160 acceptance currencies and 21 settlement currencies, encompassing a wide range of local and international schemes including: Visa, Mastercard, Alipay and Girocard.
Taking an à la carte approach 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 boosting the prospect of increased sales.
Greater financial reconciliation
Alongside the prospect of improved sales, an à la carte approach enables greater financial reconciliation as it provides one solution to monitor transactions. This allows the merchant to identify whether a transaction submitted to acquirers has been paid, obtain an aggregated view of the status of transactions, including chargebacks, and get a clear overview of the fees paid. This reconciliation tool also enables merchants to establish whether the fees applied by acquirers are correct.
By following this acquiring model, merchants could save significant amounts of money in the long term from operational costs, as it encourages and implements a more focused use of resources towards the most important areas of business.
About the author:
Marc Docherty is Head of UK Acquiring / Large - Strategic Business, at Worldline. With more than 20 years’ experience working for blue chip organisations within the banking and payments sector, including Bank of Scotland, RBS, Barclaycard, AMEX and Visa, Marc’s expertise lies in business banking, factoring and invoice discounting, and cross border payments. He also has extensive experience in acquiring, having focused on the large corporate sector across the UK and Europe for several years.
Marc is passionate about driving solutions that deliver real value to customers whilst helping organisations reduce complexity and enhance the customer experience by providing a complete end-to-end payment solution.