What Kind of Acquiring do I Need?

n this article, we’re going to discuss how acquiring works, who is involved in the process, and what needs to be done to get it up and running. Read on for all the details!

What is Acquiring?

It is a service offered by banks and financial institutions that allows people to pay for goods and services with debit and credit payment cards.

“According to international analytical companies, 54% of all transactions in 2020 were conducted in a non-cash format.”

Acquiring is available to any type of business willing to accept card payments: organizations, individuals, entrepreneurs, and self-employed citizens.

But there are different types of acquirer services, and the choice of the one that suits your business the most depends on where the transactions take place: at a point of sale, online, in an app, or all of the above.

Types of Acquiring

Depending on the target market and the needs of a company, users can choose between merchant acquiring setups offered by an acquiring bank. For merchants, acquiring can be compared by acceptance channel. POS and online acquiring cover in-person and remote card payments respectively; mobile acquiring is an in-person acceptance setup rather than a separate card-payment model.

Note that there is also another type, known as ATM acquiring (or exchange acquiring). It denotes payment through such devices as ATMs. This is an independent type of acquiring that is not required for most companies.

In-Store POS Acquiring

Offline (trade) acquiring is card acquiring at the point of sale: it implies POS terminal installation at checkout of a brick-and-mortar store. A POS terminal is a hardware system for processing credit card transactions at retail locations. With its help, the required amount is debited from the consumer's card or, conversely, the funds are returned.

In short, acquiring POS is card acceptance in person: the customer taps, inserts or swipes a card at a POS terminal, the acquirer routes the authorization to the card network and the issuing bank, and the approved amount is settled to the merchant account. If you sell online instead, you need web acquiring. Many merchants run POS and online acquiring side by side, and a payment orchestration platform keeps both under one set of routing rules and reporting.

Mobile Acquiring / mPOS

This type is best suited for merchants if their business involves active movement and they need to process credit card transactions in different places. For instance, it would be the best match for taxi companies, pizza delivery businesses, or courier services.

For mobile acquiring, compact mPOS terminals are used for card payments since they are easy to bring with you. Such equipment can be easily controlled via mobile devices using an application. The payment principle, in this case, is the same as for trading POS credit card terminals.

Mobile acquiring is not inherently less secure than other ways of accepting card payments. The level of protection depends on the payment solution, device controls and how it is implemented. Transaction limits depend on the provider’s policies and the merchant’s risk profile.

Online Acquiring

This bank service allows consumers to make payments for goods and services in online stores by credit card or e-money, using the systems of electronic payments. It is not necessary to purchase a real terminal: a payment gateway passes the card data from the online checkout to the acquiring bank.

Online card payments carry fraud and data-security risks that the merchant has to manage. A chargeback is a card-payment dispute process governed by card-scheme rules, not a simplified cancellation or a security guarantee (read more: Chargeback). When choosing an acquiring provider, assess its fraud controls, support for cardholder authentication and dispute-handling procedures.

In many cases, the cardholder can simply call their issuing bank and tell them that the goods have not been delivered or a contract has not been fulfilled properly.

3-D Secure may require shoppers to go through an additional verification step with the card issuer when paying to verify that the transaction is not fraudulent and the cardholder’s personal data is not in danger.

Usually, you direct the customer to an authentication page on their bank’s website, and they enter a password associated with the credit card or a code sent to their phone to complete the online payment.

Who Participates in the Acquiring Process?

The parties involved in the system in its simplest configuration are the following:

An Acquiring Bank

Also known as the acquirer, it is the FI that provides the necessary services and infrastructure for merchants to accept electronic payment transactions. Acquirers configure and maintain the merchant's accounts, authorize and process transactions, and deposit funds into the business account after deducting applicable fees. Acquirers also facilitate the interaction between merchants and issuing banks: an acquiring bank connects merchants to the card networks and passes the transaction data to the issuer for approval.

A Merchant

The merchant sells goods or services. They enter into an agreement with the acquirer to be able to accept payment cards like Visa and Mastercard at their store. They install the necessary hardware and software to accept card purchases securely and send transaction details to the acquirer for authorization.

A Customer

It is the cardholder who wants to make purchases from the store. They use their payment card to initiate the transaction. The card can be swiped, inserted, or tapped at a POS terminal to pay for the goods (a phone wallet such as Google Pay is tapped the same way), or the card details can be entered electronically for e-commerce purchases.

An Issuing Bank

The issuing bank, also known as the issuer, is an FI that provides customers with bank cards. If a person used their personal card for a transaction, the issuer must validate it, check the available balance, and ensure there are no fraud concerns. Then, they either approve or decline the operation and send the response back to the acquiring bank.

How Does It Work?

Now that you’re aware of the main participants of the process and understand the roles they play, let’s delve into how exactly they cooperate.

The scheme of operation of this system is as follows:

1. The customer initiates a payment by debit or credit card.
2. Based on the card data, the issuing bank receives a request for the customer’s account status. His/her solvency and the absence of restrictions preventing the payment are checked.
3. The requested amount is debited from the customer’s account.
4. The acquiring bank charges a fee for the transaction and credits the money to the merchant.
5. The merchant and the customer must receive receipts with information about the purchase transaction.

As you can see, there are multiple various steps involved. Card authorisation usually takes seconds. Capture, clearing and settlement follow separately, and the merchant receives funds according to the provider’s payout schedule and contractual terms.

Pros and Cons of Acquiring

The acquiring process simplifies business due to its undeniable advantages:

• Saving time. Cashless payments are faster.
• Reducing cash risks. The seller does not have to count cash and check banknotes for authenticity.
• Increase in revenue. From a psychological point of view, it has been proven that it is easier for people to spend money when they pay by credit card.
• Attraction of new clients. More and more people prefer cashless payments.
• Geography expansion. Thanks to Internet acquiring, you can accept payments online worldwide.
• Free staff training. The acquiring bank or service provider usually trains employees for free. These training sessions do not require additional investments from the merchant, yet they allow workers to learn useful skills for their career growth.

The disadvantages of cashless payments include:

• Efficiency. There is always a chance of technical failures in the operation of programs and equipment. However, nowadays, just a few minutes can be enough for banks and other providers to react and eliminate malfunctions.
• Safety and privacy. Each of the parties involved in the cashless payment system could potentially become a victim of fraud or experience a privacy breach. But, thanks to modern protection mechanisms, these risks, are minimized.
• Skill. A sales team has to be able to work with equipment.

How to Choose an Acquiring Service Provider?

Today, almost every financial institution offers acquiring for merchants. But the fact is that not all banking organizations are able to provide the same equipment and prescribe equal conditions. Thus, there are several criteria to be taken into account when picking a merchant acquirer:

1. Find out what equipment options the bank or financial institution offers, what is the cost of terminals, and study their functionality.
2. Read and study the agreement thoroughly.
3. Find out what fees the bank charges for processing each non-cash transaction. For instance, Visa card network fees can be different from those of American Express. The fee amount can also be dependent on merchant category, transaction volumes, geographic location, and so on.

Compare the total cost and operating terms of each acquiring offer:

• Business eligibility: supported merchant countries, business models and merchant categories.
• Acceptance channels: in-store, mobile, website and in-app card payments.
• Total fees: transaction charges, fixed fees, terminal or gateway costs, cross-border and currency-conversion charges, and refund and chargeback fees.
• Settlement terms: payout schedule, settlement currencies, reserves and conditions for withholding funds.
• Integration and operations: supported terminals or APIs, reporting, reconciliation, refunds and technical support.

There is no universal acquiring rate or maximum fee: pricing depends on the provider, merchant profile and transaction mix.

4. Clarify which payment systems are supported.
5. Highlight your rights and obligations under the contract and make sure you understand all relevant policies.
6. Study the fees offered by the bank for settlement and cash services.

All these aspects are crucial to consider to make informed decisions when selecting a merchant acquirer.

What Do You Need for Acquiring Integration into Your Business?

Before you start accepting credit card transactions, you must open a current account to which sales revenue will be credited. Once you have it ready, follow these steps:

1. Fill out an application for acquiring for legal entities on the bank’s website.
2. Wait for a call from a specialist in the acquiring department and take your time to read and understand all the terms and conditions.
3. If you agree with all the terms, provide the missing personal information and papers, and sign the agreement.
4. Obtain the equipment for work and meet the technical requirements (or a specialist will set up parameters on the site).

Generally, acquiring can be connected directly via the bank, but this is not always a convenient and profitable solution. In these cases, you can contact a payment provider that will help connect merchant acquiring in the necessary banks and offer additional options for payment processing, traffic management and control.

How Payneteasy Supports Your Acquiring Setup

Payneteasy provides payment gateway and orchestration technology that connects businesses to supported acquiring banks and payment service providers. The platform supports transaction routing, payment monitoring and reconciliation with connected providers.

Payneteasy is a technology provider, not an acquirer, and does not provide merchant accounts. Your chosen acquiring provider determines merchant eligibility, acquiring fees and settlement terms.

Once you have identified the acceptance channels your business needs, the next step is to check compatibility between your acquiring provider and payment technology. Contact Payneteasy to discuss supported integrations and the technical requirements of your payment setup.

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