What is acquirer processing?
For most of us, payments are now incredibly simple—just tap your phone or card on a contactless paypoint, or click a button online. But a lot needs to happen behind the scenes to make this all seem so seamless.
Merchants, whether physical storefronts or online, need an account issued by an ‘acquirer’ (usually a bank, but often an independent financial organisation) where customer payments can be deposited, else digital payments can’t be processed. An ‘acquirer processor’ provides the vital link between the merchant, the card network, and the acquirer, processing payments and ensuring all transactions are settled. Put simply, the acquirer has the actual relationship with the mechant, but the processor provides the technical service that makes it all work.
Why is it important?
While it is possible for the acquirer and the acquirer processor to be the same organisation, increasingly this is not the case. As the nature of payments evolves, specialised acquirer processing services are becoming more and more necessary.
Development of new point of sale (POS) and mobile point of sale (mPOS) devices and software, new payment types such as cryptocurrencies, and expanded demand from storefronts wishing to operate cross-nationally, with multiple currencies and economic legislations to take into account, has made acquirer processing an increasingly complex service.
Yet acquiring processors who are able to navigate this fragmented, complicated ecosystem and keep up with industry changes are able to capitalise on the need for agile financial tech providers.
Why should I care about it?
The payment ecosystem is complex, and subject to constant changes thanks to new technology and customer demands. Just over the last few years, how we pay for goods has evolved as a result of mobile payments, wearable technology and even automatic non-tap transactions at Amazon’s grocery stores.
Even payment technology itself is changing. Tech companies are starting to approach finance differently, and it’s possible that in the future even small organisations will be expected to offer some level of financial service to stay relevant, making acquirer processing services a vital part of the digitalised economy.
Who’s talking about it?
Tribe Payments has predicted that by 2030, fintech will no longer be a separate category from ‘technology business’. Just as we no longer talk about ‘online businesses’, since every business is now online, Tribe has suggested that in the future we may see many non-financial services businesses offering some degree of financial service, inevitably resulting in increased demand for acquirer processing services.
What start-ups need to know about the payments ecosystem:
What is an acquirer processor and how does it differ from an acquirer?:
Acquirer vs Issuer:
The transformation of global acquiring: