Merchant Benefits of Multi-Acquiring Partnerships (Series 4 May 28, 2021
Today, we’re going to take a look at those merchants who’ve elected to work in single acquirer arrangements (and taken a positive outlook from such partnerships).
Merchant Acquirer Arrangements
Out of 93 Merchants
Out of 93 merchants, 43% shared their current set up is with a single acquirer. The primary reasons for doing so include cost efficiency/commercial (63%) and needs for customers being met within proximity (30%). Simplicity is another key reason, due to “a legacy decision which will be changed by on-boarding more acquirers, because multi-acquiring is not offered by their payments gateway provider and because the merchant is an acquirer themselves.”
A more in-depth view (seen in the chart above) tells us that 50% of those working with single acquirers are smaller merchants having less than $50M in transactional value. From that, we can hypothesize that in conjunction with cost considerations, smaller merchants prefer use of single acquirer partnerships simply because they operate in smaller markets with fewer complexities dealing with cross-border eCommerce and/or APM’s.
Regardless of the merchant vertical, cost efficiency and/or commercial reasoning remain the key factors for single acquiring arrangement (accounts for 50-80% of respondents per vertical). Customer needs and proximity were also important and highlighted by the travel, general retail and fuel/petrol verticals, accounting for 4-50% of respondent’s decision making.
The data gathered relates a few key findings. Merchants working with single acquirers are often not in the process of expanding geographically, nor facilitating cross-border eCommerce transactions. Predominantly, we’re looking at smaller merchants already satisfying their customer needs without the aim of gaining new consumers.
If the decision to remain in a single-acquiring partnership is for cost and commercial reasons, “it is possible that the merchant does not see the potential from incremental transaction traffic or cost savings per transaction which can occur when being able to choose and be flexible where and how to route different transactions.”
Determining the selection of single or multi-acquirer arrangements among merchants offers insights into how they handle customer transactions. Multiple acquiring relationships give merchants more options for processing transactions, enabling greater resilience and improving conversion and cost controls through optimizing transaction routing among different acquirers.
The information gathered from ACI Worldwide’s latest study shows the net benefit, especially for large trans-national companies, that multi-acquiring arrangements can have. There is a significant improvement in acceptance rates as well as broader range of payment choices across different geographies. Merchants working with multi-acquirers express higher satisfaction ratings and there is an uptick in trends of merchants moving from single acquirer to multi-acquirer partnerships within the next 12 months. The simplicity offered by single acquirer relationships is challenged by the flexibility, control and improved conversion rates supported by multi-acquiring partnerships.