Multi-acquiring: why it can be worthwhile using more than one acquiring bank

There is no cashless payment without authorisation from an acquiring bank that charges a fee for its service. For this service, 43% of merchants have so far limited themselves to working with a single acquiring bank – partly because integrating different acquirers can involve a great deal of effort. In this article, you will learn what an acquiring bank does, why a multi-acquiring strategy is worthwhile for most merchants, and how you can make it easier to integrate new acquirers.

Definition of acquirer: what is an acquiring bank and how does acquirer payment work?

All merchants who offer cashless payments must conclude a card acceptance agreement with an acquiring bank in advance.
This acquiring bank (also known as an acquirer or merchant bank) authorises or rejects a cashless payment based on the validity of the card and the given credit limit.
In this role, the acquiring bank acts as an important buffer between the payment service provider (PSP) and the issuing bank.

Find out what roles these and other market participants play in cashless payments and how they interact with each other in our article on cashless payments.

What is the lock-in effect?

A lock-in effect is a situation where customers find it difficult to switch to another provider due to high switching costs or other obstacles. The higher the switching costs, the greater the lock-in effect.

How do acquiring banks benefit from the lock-in effect?

In order to enable their customers to make cashless payments, merchants must provide the technical infrastructure (card terminal and POS system) and also conclude contracts with a payment service provider (PSP) and (at least) an acquiring bank.
In order for cashless payment to function smoothly, these different areas must be coordinated with each other. This creates organisational and technical dependencies that can make it very complicated for merchants to change acquiring banks.
To avoid these complications, merchants often stay with an acquiring bank despite high fees.

What is a multi-acquiring strategy?

In a multi-acquiring strategy, merchants or payment service providers work with several acquiring banks at the same time so that they are independent of any one acquirer from a technical, legal and commercial perspective.
If multi-acquiring is implemented in your own EFT system, cashless payments can always be processed by the acquiring bank that best suits the relevant card or payment type, or that offers the best conditions.

Advantages of multi-acquiring: why it can be worthwhile for merchants to use more than one acquiring bank

What can be done to make the introduction of multi-acquiring simpler?

Merchants who want to introduce multi-acquiring must adapt their payment infrastructure accordingly. When it comes to technical integration, Pepper, the universal connection between payment terminal and POS device, makes it much easier to connect new terminals and thus considerably reduces the effort and expense involved.

How do you keep track of the different fees involved in multi-acquiring?

Several acquirers in parallel – this means that there will also be a variety of different fees (depending on the acquirer contract). The payment analytics centre of the reconciliation software Matchbox helps merchants to keep track of all the structures and fees of the different acquiring banks – and thus optimise their costs.