As the world becomes increasingly digital, merchants need to adapt their businesses to meet changing customer needs. In recent years, one of the key changes has been the growing popularity of card payments, especially online. With more and more customers choosing to pay with credit or debit cards instead of cash, card acquiring has become an essential service for merchants.
What is Card Acquiring?
Card acquiring is the process by which a merchant or retailer can accept card payments from customers. A card acquirer is a financial institution that makes it possible for merchants to accept payment of goods and services via credit or debit card. The card acquirer acts as an intermediary between the merchant’s and the customer’s bank, ensuring that the transaction is completed securely and efficiently.
The process of card acquiring can be broken down into three main stages:
- Authorisation: When a customer makes a card payment, the card acquirer sends an authorisation request to the customer’s bank. This is to ensure that they have sufficient funds available to cover the transaction. If the transaction is approved by the bank, the customer’s account will be debited and the retailer’s account will be credited with the funds.
- Clearing: After the authorisation stage, the card acquirer will send a clearing request to the customer’s bank to transfer the funds to the retailer’s account. This stage typically completes within 1-3 days.
- Settlement: Once the clearing process has completed, the card acquirer will transfer the funds from the retailer’s account to their designated bank account. This process can take 1-3 days, depending on the acquirer and the merchant’s bank.
How Does Card Acquiring Work in the UK?
In the UK, there are several card acquirers that offer card acquiring services to merchants. These include major financial institutions like Worldpay, Fiserv, GlobalPayments and Elavon, along with specialist acquirers like PayAlly.
When a merchant signs up for card acquiring services, they are sometimes required to pay a setup fee and an ongoing monthly fee for the service. Along with this, they will also be charged a transaction fee for each card payment that they accept from customers.
It’s important to be aware that the fees charged by card acquirers can vary significantly, so it’s worth shopping around to find the best deals. Merchants should also consider the level of customer support offered by the acquirer, along with the security features of their payment processing system.
Types of Card Acquiring Services
There are different types of card acquiring services that retailers can choose from, each with their own advantages and disadvantages. These include:
- Traditional merchant accounts: A traditional merchant account is a type of card acquiring service where the retailer sets up a dedicated account with the card acquirer. This account is solely used for processing card payments and the merchant is typically required to pay a monthly fee and a transaction fee for each payment that they accept.
- Payment gateway services: Payment gateway services allow retailers to accept card payments via a website or mobile app. Some providers of this service will typically charge a setup fee, ongoing monthly fees, and a fee per payment accepted.
- Mobile card readers: Mobile card readers allow retailers to accept card payments using a mobile device such as a smartphone or tablet. These readers are typically provided by specialist acquirers such as Square or iZettle and are ideal for small businesses or those that need to accept payments in-person and on-the-go.
Choosing the Right Card Acquirer
Choosing the right card acquirer is essential for any retailer looking to accept card payments. When selecting a card acquirer, retailers should consider the following factors:
- Fully integrated suite of financial services solutions: In the grand scheme of business payments, having a stand-along card acquiring service provider is not enough. Merchants need to think about paying for their suppliers, fx fees if they trade globally, and cash management and operations. The right card acquirer must be able to offer a total package of financial services.
- Fees: The fees charged by the card acquirer can vary significantly depending on the provider, so it’s worth taking the time to shop around and find the best deal.
- Customer support: Merchants should look for a card acquirer that offers excellent customer support, with fast response times and knowledgeable representatives who can help with any issues or queries.
- Security: Security is an essential aspect of card acquiring, as merchants need to ensure that their customers’ payment details are kept safe and secure. Merchants should look for a card acquirer that offers robust security features such as encryption and fraud detection tools.
- Integration: When choosing the right card acquirer, merchants should consider how easily the card acquirer’s payment processing system can be integrated into any existing systems that they use, such as an e-commerce platform or a point-of-sale (POS) system.
- Reputation: The card acquirer’s reputation is also a crucial factor to consider. Merchants should look for a reputable acquirer with a track record of providing secure, reliable payment processing services.
Best Practices to Follow
To get the most from your card acquiring services as a merchant or retailer, it’s worth following these best practices:
- Ensure PCI compliance: To safeguard the payment details of their customers, merchants should ensure that they adhere to the Payment Card Industry Data Security Standard (PCI DSS). This set of regulations is designed to enforce secure and compliant payment processing systems, and compliance is crucial.
- Train staff: Merchants need to ensure that their staff are fully trained on how to use the payment processing system and understand the importance of security and data protection.
- Monitor transactions: Merchants should monitor their card transactions regularly to identify any suspicious activity or potential fraudulent activity.
- Offer multiple payment options: Offering a range of different payment options, like credit and debit cards, can help improve the customer experience overall and increase sales and revenue.
- Stay up to date: Merchants should ensure that they keep up to date with any changes in regulations related to card acquiring to ensure compliance and avoid any fines or penalties.
The Benefits of Card Acquiring for Merchants
Accepting card payments through card acquiring services can have many benefits for merchants. Some of the key benefits are as follows:
- Increased sales: By accepting card payments from their customers, retailers can cater to a wider customer base. This includes those who prefer to pay by card, and those who don’t have cash readily available to pay. This also expands a merchants reach, giving them the ability to sell their offerings across the globe.
- Improved cash flow: Card payments are typically processed quite quickly, with funds generally credited to the mechant’s account within just a few days. This can help with improving cash flow and reduce the risk of debt.
- Convenience: Card payments are a convenience and often preferred payment method for customers nowadays since they can pay using their preferred card without the need for cash. This can boost the customer experience overall, leading to better customer satisfaction and retention.
- Reduced fraud risk: A good card acquiring service will typically come with robust security features included. This might look like encryption and fraud detection tools, which can help with reducing the risk of fraud and protect both the retailer and customers.
- Improved customer experience: Card acquirers coupled with other services offer the option for customers to choose from multiple payment options, including card payments. This can improve the customer experience and put the customer in control of how they want to pay, which can ultimately make for a better customer experience and increase retailer reputation.
Understanding Card Acquiring Fees
The fees charged for the service is one of the key considerations for retailers when selecting a card acquirer. Card acquiring fees can be complex, with different types of fees that are charged at the various stages of the payment process. Some of the most common types of fees include:
- Setup fees: These are one-time fees charged by the card acquirer when the retailer signs up for their services. They can vary depending on the acquirer. Typically, you can expect to pay between £0 and £500.
- Monthly fees: These are ongoing fees that the card acquirer charges the retailer for using their services. Again, they can vary depending on the acquirer, and may also be affected by the retailer’s transaction volume. This is a variable monthly cost depending on what card types are processed and the turnover
- Transaction fees: These are charged for each card payment that the retailer accepts. Typically, you can expect to pay 0.3% – 3% of the transaction value, but this can vary depending on the type of card used and the acquirer.
- Chargeback fees: These fees are charged by the card acquirer when a customer disputes a payment and request a refund. They tend to cost around £10 to £50 per chargeback but can vary depending on the card acquirer and the reason for the chargeback.
- Cross-border fees: These fees are charged when a customer makes a payment using a card that has been issued in a different country. While they may vary based on the acquirer and the country where the customer’s bank is based, you can usually expect to pay 1-2% of the transaction value.
It’s crucial for merchants to understand the different types of fees charged by card acquirers, and shop around to find the best deals. Retailers should also be aware of potential additional fees, such as payment gateway fees or terminal rental fees.
By selecting the right card acquirer and following best practices for security and compliance, merchants can provide a seamless, secure payment experience for their customers.
PayAlly offers a full suite of financial services solutions, including card acquiring. All of their services are tailor-made for each client – from fees and tariffs, to service level agreements. Regardless of size and transaction volume, each client is guaranteed a dedicated Relationship Manager whose main role is to ensure client success. Get in touch for a chat about the needs of your business today.