A Multi-acquiring strategy requires a network of acquirers to process payments across the globe, which in turn creates many benefits for merchants and payment service providers (PSPs). It has proven to lower costs, increase conversion rates, and enhance the customer experience.
To further discuss the differences between single- and multi-acquirer approaches to payments and how PSPs and merchants are taking advantage of multi-acquiring relationships, PaymentsJournal sat down with Kieran Mongey, Manager of Solution Consulting Merchant Retail at ACI Worldwide, and Raymond Pucci, Director of Merchant Services at Mercator Advisory Group.
PSPs and merchants use multi-acquiring relationships
When ACI Worldwide speaks to PSPs and merchants about product development and solution delivery, three main talking points come up:
- Customer experience
- Impact of growth
- Impact on cost
According to a global report on multi-acquiring by ACI Worldwide and Edgar, Dunn & Company, resilience (21%) was the main reason for using a multi-acquirer approach, followed by to reduce operational costs (18%), and to improve conversion rates (14%).
“But when we start to [later] explore the benefits, it’s the conversion capacity that would probably, if you’ve asked them retrospectively, be [at] the forefront of what they can achieve,” said Mongey. Eighty-five percent of merchants did see a significant increase in conversion rates, and 23% of respondents increased their conversion rates by more than 10%. These numbers are a clear sign that investment in this kind of multi-acquiring strategy is prudent.
“Having that flexibility, to be able to have access to multiple acquirers, that’s really a big plus for merchants,” added Pucci.
The benefits of more than one acquirer
First and foremost, the greatest benefit of multi-acquiring is risk mitigation. More than one acquirer improves resilience, which serves to mitigate outages and latency. But in terms of financial benefits, it’s more about routing transactions in what ACI Worldwide calls “dispatching in our own environment.”
In some countries, 3-D Secure authentication and PSD are more prevalent and are an important factor in the customer experience. “Acquirers are now more accountable for authentication and fraud and risk management,” explained Mongey. “So 3-D-s strategies could drive reasons for multi-acquiring and dispatching.” Compliance and scheme mandates and the ability for acquirers to stay up-to-date with these important regulations can be highly effective.
Other key reasons for multi-acquiring are local versus global acquiring approval rates and interchange, along with chargeback processing costs and merchant acquirer fees. Additional considerations include support for business analytics, payment insights and optimization, as well as settlement, payment, and file data requirements. “Each basis point or percentage improvement is really fundamental to optimizing profit,” added Mongey.
Lastly, there are alternative payments which are asynchronous and often happen outside of the acquirer to reach settlement. However, mobile wallet transactions do go through the acquirer and the technology must be able to support those transactions. Flexibility of transactions around MCC codes and dynamic descriptors are also important.
There are many dimensions to a multi-acquiring approach, but a platform such as ACI’s is easy to configure, evolve, and orchestrate.
Acquirers across ACI’s payments gateway
ACI Worldwide has over 260 connectors, all active and available to its network. This is important because it helps to enhance approval rates, speed, flexibility, and functionality. “Whether it’s a direct merchant, and they want to go into different countries, they know that they can act locally in their global strategy [and] they can have local connectivity,” said Mongey. .
Notably, ACI Worldwide is a dedicated technology layer for any payment opportunity in secure commerce. All it needs is the capability to be that technology layer. Then there is the matter of developing a connection and ensuring it’s up-to-date with schemes, mandates, functionality, and maintenance.
Merchants are not concerned with the complexity of the technology; they simply want to switch it on and be rest assured that they will get the highest possible conversion. “How we, as a developer portal [and] as a solution, make it easy to work with is really also quite important,” continued Mongey. Simple code for adding a payment method, changing a widget, or updating the style of the checkout page is one approach for making the platform more user friendly.
Global reach is important, and companies can leverage this reach in the presentation of their product. But if that isn’t aligned with their payment strategy and connectivity, then the customer won’t make the purchase at the end of the day.
“That’s really the fundamental goal of all of the customers and merchants,” concluded Mongey.
Why do some merchants prefer to work with only one acquirer?
A single-acquirer approach is much more common amongst mid-tier and smaller merchants. This is most likely because their banking strategies drive their payments decisions. These business owners go to an acquirer for banking purposes, settlement, and collection of money. If this acquirer can offer the merchant the gateway, then they are embedded into that single strategy, and there are no other options. If the acquirer has the functionality to serve the merchant’s specific customer base, then this option is suitable for that particular company.
“[The merchant] want[s] a single settlement, the old kind of accounting and back end or finance team,” suggested Mongey. “So if the acquirer has the level of functionality that is in line with [the merchant’s] customers, and maybe you’re not thinking outside of the box about what more you could achieve, then that would be sufficient.”
Multi-acquiring is an investment in time and resources, which is why many merchants never test its capabilities or consider it an option. Because the digitization of the world is moving us toward an e-commerce dominant lifestyle, having the payments strategy as finely tuned as possible will drive revenue and ROI.
Due to the experience of merchants during COVID-19, there is now more awareness of the available options in the payments strategy.