What is a payment acquirer and how does it affect your business?
The proportion of consumers spending money online has been steadily growing over the last two decades. Between 2019 and 2020, online sales almost doubled as a percentage of overall retail sales. That number has declined slightly since its 2020 peak, but the baseline has still remained higher than it was pre-pandemic.
For this reason, electronic payments have taken on a central importance for businesses. The most successful businesses have been careful to assess and upgrade their payment solutions in order to maximise profits. Rather than just going with familiar legacy options, they are taking advantage of the most advanced and cost-effective new payment services.
Part of this involves choosing the payment acquirer that offers the smartest and most seamless solution for your business. This article will guide you through what a payment acquirer does and how to choose the right payment acquirer to help your company succeed.
What is a payment acquirer?
You might have heard payment acquirers referred to as merchant acquirers. That’s because their job is to handle certain aspects of a merchant’s online transactions. A payment acquirer is a financial institution that provides payment processing services to merchants. They enable merchants to accept various payment methods, such as credit and debit cards or digital wallets.
Payment acquirers are licenced to issue business accounts and handle the risks and regulations associated with this. They also settle funds from customer accounts into merchant accounts once a transaction is completed. As such, payment acquirers are essential intermediaries in the payment processing ecosystem. They maintain the necessary technology and infrastructure to securely handle payment transactions, which includes data centres, security measures and fraud detection systems.
Worldpay and Barclaycard are examples of two legacy payment or merchant acquirers. Airwallex is an example of a newer generation of financial technology platforms. Airwallex offers payment acquirer services alongside payment processing and modern global business accounts.
The business case for payment acquirers
Payment acquirers are directly linked to your bottom line, which is why it’s so important to choose the right one, whatever the size of your business. A reliable payment acquirer will process transactions smoothly and securely. Payment acceptance rates are an important metric to note: a high percentage of transactions being successfully authorised is a sign of a successful relationship between business and payment acquirer.
Having the right payment acquirer can also have a positive effect on conversion rates. Acquirers should offer a wide range of payment methods, including Buy Now Pay Later (BNPL) methods and geographically specific local payments for international customers. This will decrease shopping cart abandonment, which can put a serious dent in profits.
How do payment acquirers work?
It can be quick and effortless to complete electronic payments online, however there is a complicated series of interactions going on behind the scenes:
When a customer enters their card details into an online checkout page and clicks ‘pay’, this information is transferred to the merchant’s acquirer via a payment gateway.
The acquirer passes this message on to the relevant card network or scheme, such as Visa, MasterCard, or American Express.
The card network then communicates with the card issuer, which can authenticate the funds and authorise the transfer.
This is then relayed back to the acquirer, which deposits funds into the merchant’s account, settling the transaction.
How do payment acquirers help with compliance and regulations?
Payment processing is highly regulated and payment acquirers play an important role in helping businesses stay compliant with both local and international standards. Acquirers should have a deep and up-to-date understanding of the regulatory landscape in regions all over the world.
Data security is one area in which acquirers can protect the businesses they work with. Acquirers can help businesses achieve certification for the Payment Card Industry Data Security Standard (PCI DSS), which is relevant in the US and several other countries, and helps protect sensitive customer data.
Acquirers typically monitor payment transactions for signs of fraud or suspicious activity, and can help businesses identify potentially fraudulent transactions to comply with anti-fraud regulations. Payment acquirers also implement robust security measures, such as data encryption, tokenisation, and secure networks, to protect sensitive customer information and meet compliance requirements. They can help businesses manage various risks, including those related to chargebacks.
What fees do payment acquirers charge?
There are many types of payment structures and fees that payment acquirers may charge. These should be carefully budgeted for when carrying out financial planning for your business, along with the cost of wire transfers, which can be steep. Here are some of the most common types of fees:
Per-transaction fee: These are charged by payment acquirers for each transaction processed. It can be a fixed amount or a percentage of the transaction value.
Interchange fees: These fees are charged by card networks and passed on to the acquirer, who in turn passes the fees on to the merchant.
Payment gateway fee: If the acquirer provides this as a service.
Service fees: For example, a flat monthly fee for access to the acquirer's services and infrastructure, an annual fee for maintaining the account, setup fees, and a statement fee for providing transaction statements.
Chargeback fees: To cover administrative costs when a customer disputes a transaction, and the acquirer processes the chargeback.
Cross-border fees: Transaction fees and currency conversion fees charged when processing international payments.
There may be various other fees on top of these, for example if businesses fail to meet a minimum monthly transaction volume or if the contract with the acquirer is terminated early.
Not all payment acquirers charge all of these fees, and the costs can vary substantially. It’s worth shopping around to lock in savings that will become increasingly significant as your company grows. Also be aware that you can negotiate with payment acquirers for better rates.
What added-value services can modern payment acquirers offer?
Modern payment acquirers often go above and beyond to enhance the overall payment experience for business and their customers. These can help businesses increase efficiency, improve security and provide valuable insights.
Popular added-value services include advanced fraud detection and prevention tools, integrations with popular shop fronts like Shopify and WooCommerce, and accounting SaaS platforms like Xero, as well as assistance navigating local compliance and regulations. Multi-currency processing and settlement is another valuable add-on, as is wide geographical coverage.
How Airwallex can help
With Airwallex as your payment acquirer, payment processing is frictionless, reliable and cost-effective, no matter where in the world your customers are. Open an account in minutes, and join thousands of businesses already using Airwallex to streamline their finances globally.