All companies that accept credit and debit card payments online or in stationary businesses face the issue of choosing the right acquirer. This decision is often taken off the hands of small companies and startups. In these cases, an all-in-one payment solution from a specialized SME payment service provider is usually applied, already including acquiring. But especially for merchants with an international sales presence, various sales channels, and high turnover, the free choice of acquirer unlocks valuable potential for cost savings and better authorization rates.

What is an acquirer-agnostic payment service provider (PSP) / gateway?

An acquirer-agnostic payment service provider (PSP) is characterized by the fact that its payment gateway provides connections to several national and international acquirers. Companies that use the gateway to process their customer payments can choose from this range of acquirers. The PSP can provide advice on the selection of one or more suitable acquirers.

What are the fundamental advantages of a free choice of acquirer over an “all-in-one” payment solution?

Depending on the category of goods, the countries in which they are sold, and the sales channels, the prices charged by acquirers for accepting card payments vary considerably. With a PSP that facilitates connections to various acquirers, retailers can minimize their payment costs by choosing a financial partner that offers the best deal for their requirements. At the same time, the ability to switch acquirers quickly strengthens the merchant’s negotiating position and guarantees fair conditions that align with the market.

In addition to cost reduction, improving the availability rate is also a criterion for many merchants to choose an acquirer-agnostic payment service provider. The availability rate means the availability of credit card payments for shoppers in the online shop in relation to the shop’s total uptime. With an acquirer-agnostic solution, merchants can set up several acquirers for their shop. Should the preferred acquirer fail for technical reasons, credit card payments made during this time can be processed via a “backup” acquirer.

Even without the emergence of technical problems, the ability to switch providers quickly and easily when required opens up further advantages, especially for multinational companies: For example, the go-to-market time when entering new country markets can be significantly reduced if the payment gateway used provides connectivity to acquirers that specialize in the target region in question. If the payment performance of a newly integrated acquirer falls short of expectations or other issues arise, for example, in terms of service quality, an alternative can be found quickly.

In which use cases do companies profit the most from a free choice of acquirer?

Companies benefit from the use of an acquirer-agnostic payment gateway in different ways. The model gains particular relevance when the business operation features one or both of the following characteristics.

Selling goods and services in different countries

For almost every sales country or region, there are acquirers that either originate directly from the region or have a solid local presence. With these local or regional providers, merchants entering new markets usually obtain more favorable terms and better acceptance rates for card payments in the respective country. This is particularly true if local credit card brands (i.e., non-U.S. brands) are widely spread in the markets concerned.

Many acquirers offer cross-border card acceptance for some world regions, such as the EU. However, it is often the case that certain countries within the region are generally not served. A merchant using an all-in-one payment solution with such an acquirer may face problems when expanding his business: If he wants to open up a new country market that is not covered by the acquirer included in the bundled solution, he will have to set up a new, additional payment solution for the associated country shop and integrate a new gateway.

Therefore, merchants selling internationally or planning to go international must rely on a fast and uncomplicated connection to relevant acquirers in the countries they sell in. This enables them to select the provider that helps them enter the new market on the best possible terms.

With international acquirers, it is also important to note that there is de facto no provider that operates a single technical platform that can be used globally. For example, a merchant may choose a large, internationally active acquirer to accept card payments within the European Union. To do so, he signs a contract with a country organization of the acquirer within the EU. The country organization connects the merchant to its European processing platform. If the merchant wants to expand his business to North America, he cannot use his existing acquirer setup. Since a different technical platform is required to accept card payments in the U.S. and Canada, he must additionally connect to this platform (and sign a new contract with the U.S. company of the same acquirer). This effort would be avoided by using a payment gateway, which already includes the connections to the two required platforms.

Belonging to a “critical” industry

Most acquirers aim to maintain a balanced risk profile when selecting their customers. This means that merchants whose business model is statistically susceptible to fraud or chargebacks are only signed up in limited numbers or not at all.

In practice, this approach causes companies in specific industries difficulties finding a suitable acquirer. In addition, these merchants often incur risk surcharges for accepting cards – in the form of a higher disagio (variable transaction fee) and thus higher costs for payment processing.

For example, business models characterized by the fact that the time of purchase is significantly earlier than the delivery time may encounter problems. Classic examples are the sale of furniture or individually manufactured products, whose production times can sometimes be several weeks from the time of purchase. Business models whose performance can be affected by force majeure are also viewed critically. These include travel agencies, airlines, and event ticket sellers.

Acquirers may also realign their customer portfolio over time to dispose of less profitable customer segments (industries). For example, merchants may suddenly find themselves in the situation of having to change their long-standing provider because prices have been increased or a contract has been terminated.

In all these cases, it is of great value for the companies concerned to draw on a broad selection of acquirers for their payment processing. This way, they do not have to make the success of their business model dependent on a single provider and can switch quickly if necessary. The portfolio of the payment gateway used may even include an acquirer with industry specialization.

Should merchants choose an acquirer-agnostic payment service provider in any case?

No. When comparing all-in-one providers and acquirer-agnostic solutions, there is no winner or loser; both approaches have their relevance in the market. Companies must decide which model is best for them concerning their individual situation. Points of reference can be:

The business model and corporate strategy

As described above, companies with international operations and specific industries, in particular, can benefit from a free choice of acquirer. In this context, young, fast-growing companies that have relied on an all-in-one payment provider should ask themselves about their medium- to long-term strategic goals: Are there plans to expand into additional country markets? Will the product range be expanded to include other product groups (which the acquirer may see as risky)? If applicable, preparing a cost-benefit analysis for switching to an acquirer-independent payment service provider is worthwhile before launching the market in a new country or business area.

The size of the company by turnover

With high turnovers in the store, it pays for merchants to look at the costs associated with acquiring and the opportunities for optimization that come with a change of provider. For a small merchant, potential double-digit monthly cost savings will often not be reason enough to switch to a new payment service provider and acquirer. On the other hand, a large merchant who can expect savings in the mid-five-digit range has significantly more reason to take on new technology implementation.