In 2021, bank cards like Visa and Mastercard have become the most popular means of payment in the world. It is a figure that demonstrates how fast global commerce evolves and explains why it is becoming harder to conduct business without acquiring.
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!
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 payment cards: 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.
Depending on the target market and the needs of a company, users can choose between three types of services offered by a merchant acquirer, namely:
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.
Offline Acquiring
Offline (trade) acquiring 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.
Mobile Acquiring
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.
“Note that it is the least secure method used for accepting payments. Due to this, banks can limit the number of purchases via this type.”
These limitations are not intended to hinder legitimate transactions. On the contrary, they aim to strike a balance between convenience and security. To achieve it, banks continuously monitor transaction patterns to detect and prevent fraud. A proactive approach helps ensure the safety of all parties.
Internet 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.
Nowadays, online payments are totally secure. To minimize the risk of fraud and privacy breaches for cardholders, the payment processing algorithm features a possibility of a simplified cancellation (Chargeback) implemented into the online payment procedure.
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.
3D 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.
The system in its simplest configuration involves the following parties:
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.
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, 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 acquirer.
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:
As you can see, there are multiple various steps involved. However, in practice, the whole transaction process is usually completed in a matter of seconds.
The acquiring process simplifies business due to its undeniable advantages:
The disadvantages of cashless payments include:
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:
“Important! The financial organization will receive a certain percentage from each transaction made through the credit card terminal. In the case of trading acquiring, it varies from bank to bank and can be as high as 2.5%.”
All these aspects are crucial to consider to make an informed decision when selecting a suitable candidate.
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:
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 merchant service provider that will help connect acquiring in the necessary banks and offer additional options for managing and controlling traffic.
We are a platform that allows customers to quickly and easily get connected to bank acquiring and start processing the credit card transaction flow. We provide a whole range of effective technical solutions for our clients, namely:
For a company, being linked with a merchant acquirer means an increase in revenue and an influx of new customers. If you want to develop your business, it is important that both cash and non-cash payments can be conducted at points of sale.
Not to worry - we will be the safe and effective one-stop solution your company needs for setting well-functioning acquiring. Contact us as soon as possible to make the first step toward upgrading the way you handle payments!
Yes, you can connect several types of acquiring at once if you provide different kinds of services. For example, trading and mobile ones.
When activating the acquiring service, all payments received from customers’ cards must be credited somewhere. To do this, you need to open a current bank account. Thus, to arrange acquiring and cooperate with the bank without breaking the rules, you will need the current account.
It is possible only in a number of legislatively prescribed cases, including:
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