Who needs acquiring?

When we make card purchases through terminals, websites, etc., we may not even think about how the payment is made and what processes it goes through.

The process of making the above transactions generally involves several entities:

• Payment service provider
• Acquirer
• Issuing bank (client’s bank)
• Payment system (Visa, Mastercard, American Express, Union Pay)
• Person making the payment

Each of these entities is important for the correct payment, but today we will focus on acquirers as one of the main tools that businesses need.

Who is an acquirer?

An acquirer/acquirer bank is a financial institution that actually acts as an intermediary in making payments, ensuring that merchants (persons providing goods or services) can effectively receive funds from customers.

It will be quite difficult to explain how an acquirer works if we talk only about the functionality without mentioning the work of all other participants in the process. That is why it is advisable to describe the payment process step by step.

The card payment process looks very simple from the buyer’s point of view: when a customer visits a website and wants to order something, they enter their card details to make a payment, wait a few seconds, receive a notification from their bank about the payment, and see a window confirming the successful completion of the transaction.

However, it is worth taking a closer look at what actually happens during these few seconds:

1. The customer enters the card details on the website, initiating the transaction;
2. The payment service provider collects the relevant data and creates a so-called payment gateway through which the information is transmitted further;
3. The transaction data collected by the payment gateway is transmitted to the acquirer, which in turn sends a request through the payment system to the bank where the customer’s account is opened (the Issuing Bank);
4. Upon receipt of the request, the issuing bank checks all information, including the balance on the customer’s account, which must correspond to the amount of the transaction and checks whether the card balance itself is sufficient to complete the transaction;
5. If the issuing bank confirms the payment, this information is transmitted back to the acquiring bank, which deducts the customer’s funds to the merchant’s account;
6. Information about the transaction confirmation reaches the website with a message about the successful payment and you, as a customer, can enjoy the service or goods provided.

Interaction between merchants and acquirers

We have discussed the work of acquirers and their role in payment processing, but it is also important to understand how merchants can start interacting with acquirers in order to receive funds from their customers.

To enter into an agreement with an acquiring bank, you first need to prepare information for the acquirer’s due diligence. This includes, among other things, confirming your legal personality, identifying shareholders and directors, and defining your expectations for your business.

As for the main documents to be collected and information to be provided, the following can be distinguished

1. Information about the company;
2. Corporate documents (articles of association, incorporation document, documents confirming the company’s address, shareholder/director certificate, etc;)
3. Information on the shareholding, i.e. how the shares are divided among the shareholders;
4. Description of the business model of your project;
5. Bank details of your corporate account;
6. A list of registered websites through which customers will make payments.

In addition, it is very important to have all the fundamental policies on the website: terms and conditions, subscription policy, etc.

Once all the necessary documents are prepared, it is possible to finalise the process of opening a merchant account in a relatively short period of time – as a rule, the approval process takes from 1 to 3 days, but the time may depend on the compliance of the relevant institution.

Once approved, you can start managing your account in full.

What to look for when choosing a bank

The choice of a bank that will provide you with acquiring services depends mainly on your specific needs and expectations, so you should first of all pay attention to the following aspects of potential acquirers:

1. Reputation and reliability: Look for banks that have a good reputation and are trustworthy. Study the history of the bank, its financial stability, whether it has a valid licence, possibly publications in the media, etc. In other words, look for as much information as possible about the bank so that you don’t end up with an unreliable institution that will declare insolvency in a flash and disappear from the radar.
2. Payment processing capabilities: Make sure the bank supports a variety of payment methods, including credit and debit cards, mobile payments, and online payment gateways. Make sure they can handle your transaction volume efficiently and securely. More options mean more customer engagement.
3. Fees: Understand the pricing structure for acquiring services, including transaction fees, onboarding fees, monthly fees, and any other charges. Compare these costs with other banks to ensure they are in line with your budget and projected transaction volume.
4. Industry knowledge: Find out if the bank has experience working with businesses similar to yours and whether it offers customised solutions for your industry, which can also affect fees.
5. Terms of the agreement: Pay attention to the term of the agreement, any termination fees, reserve requirements, additional obligations, waivers by the acquirer, penalties, etc. Make sure that the agreement offered by the acquirer does not contain discriminatory provisions that could create unpleasant situations for you in the future.
6. Customer support: Considering that issues with the payment of funds to your account can often be urgent and even vital for your company, it is necessary that the bank has a good support service that can help you resolve financial issues that have arisen in the course of your business relationship with the acquirer promptly and without unnecessary delays.
7. Global coverage: Look for banks that support multi-currency transactions, have partnerships with international payment networks, and can efficiently process cross-border payments, if this is a natural fit for your needs and you are focused on a broad market.

Conclusion

In today’s world, the online payment procedure, which involves several institutions at once to ensure the safe and efficient execution of a transaction, has proven to be the best option for receiving payments in the course of doing business, as it systemises the entire process and saves a huge amount of resources.

As a result, an acquirer is an indispensable tool in your business activities, as it is not even a matter of digitalising your processes, as this methodology is the minimum standard, which is why it is vital for you, as an entrepreneur, to choose your acquirer, which you should approach carefully and with focus, so that receiving funds from your customers is convenient and does not cause you unnecessary hassle.