Card acquiring for international markets: global, local, and cross-border insights

As more businesses expand into international markets, accepting payments from customers around the globe has become essential for growth. Card acquiring plays a crucial role in enabling businesses to accept credit and debit card payments from customers in various countries. Understanding card acquiring, the differences between cross-border and local acquiring, and the role of global acquirers are essential for companies looking to optimize their payment strategies in multiple markets.

This article explains card acquiring in-depth, including cross-border payments, local acquiring, and global acquiring, and offers insights to help you decide which strategy fits best for your business. We’ll explore examples of popular acquirers, the difference between card acquiring and processing, and answer some key questions about this critical component of international commerce.

What is card acquiring?

Card acquiring is a process whereby a financial institution, known as an acquirer or acquiring bank, enables a merchant to accept payments from a customer’s credit or debit card. The acquirer ensures the transaction goes through securely, verifies funds with the customer’s issuing bank, and settles payments with the merchant.

In essence, card acquiring connects the merchant, the issuing bank (the customer’s bank), and the card networks (like Visa and Mastercard) to facilitate secure, seamless payments. The acquiring bank handles all aspects of the transaction, including authorization, processing, and settlement, making it a vital part of any ecommerce or retail business looking to accept card payments.

The role of card acquirers in international payments

In international markets, card acquirers manage the complexities of cross-border transactions, such as currency exchange, regulatory compliance, and data security. Here’s a breakdown of the main functions they perform:

• Authorization: Acquirers ensure that funds are available in the customer’s account before proceeding with the transaction.
• Data security: Acquirers and payment solutions, like PCI-compliant vaults, protect sensitive customer data during the transaction, meeting security standards and protecting against fraud.
• Settlement: Acquirers transfer funds from the issuing bank to the merchant’s account, completing the transaction cycle and ensuring merchants are paid.

Examples of card acquirers

Popular card acquirers include banks and financial institutions that specialize in acquiring services for both domestic and international payments. Here are some well-known examples:

• Chase Merchant Services: Widely used in the U.S., providing comprehensive acquiring services for businesses.
• Worldpay: Offers local and international card acquiring options, making it a strong choice for global merchants.
• Adyen: A global acquirer that supports local acquiring and cross-border payments, especially for high-volume businesses.
• Barclaycard: Prominent in the European market, particularly for companies with a large customer base in the EU.

Each acquirer provides services tailored to different business needs, enabling them to support secure and efficient card payments worldwide. Check out Gr4vy’s integrations to learn more. 

What is the difference between card acquiring and card processing?

While often used interchangeably, card acquiring and card processing represent distinct steps in the payment flow:

• Card acquiring: This refers specifically to the acquirer’s role in authorizing, settling, and managing card transactions for a merchant.
• Card processing: This involves the technical side of moving transaction data between the merchant, the acquirer, the issuer, and card networks. Processors handle data routing, ensuring each party receives the necessary information to complete the transaction.

To clarify, an acquirer is responsible for the business’s merchant account and ensuring funds reach the merchant’s bank account, while processors focus on the transaction’s data flow and routing.

Is Visa or Mastercard an acquirer?

No, Visa and Mastercard are not acquirers. Instead, they are card networks that manage the infrastructure for transactions between acquirers, issuers, and merchants.

• Visa and Mastercard establish the rules, standards, and data transfer processes for card transactions.
• They provide the backbone of the transaction network, allowing for fast and secure payment processing across millions of merchants worldwide.

In short, Visa and Mastercard facilitate payments but do not act as acquiring banks. Instead, acquirers work within the framework provided by these networks to support transactions for merchants.

Cross-border payments and their impact on card acquiring

Cross-border payments are transactions that occur between a merchant and a customer in different countries. For businesses expanding internationally, cross-border payments offer a way to reach new customers without needing a physical presence in each country.

However, cross-border payments come with additional costs and complexities:

• Currency exchange rates: Converting currencies can lead to additional fees, affecting the merchant and customer.
• Higher transaction fees: Card networks and acquirers typically charge more for cross-border transactions, given the added risk and regulatory requirements.
• Regulatory hurdles: Each country has different regulatory standards, meaning businesses must comply with various laws when accepting cross-border payments.

For businesses prioritizing reach over transaction cost, cross-border payments provide a relatively easy way to accept payments from international customers. To dive deeper into transaction costs and considerations, check out our article on understanding real-time payments.

Local acquiring: a tailored approach for specific markets

Local acquiring means partnering with an acquirer located in the same country or region as your customers. This strategy has several advantages:

Benefits:

• Lower transaction fees: Local transactions often carry fewer fees than cross-border payments, reducing costs for merchants and customers alike.
• Higher approval rates: Local transactions are less likely to be declined by issuers, improving approval rates and reducing the risk of cart abandonment.
• Enhanced customer experience: Local acquiring allows customers to pay in their own currency, enhancing convenience and customer satisfaction.

Challenges:

• Multiple acquirer relationships: Businesses in numerous regions may need to set up relationships with multiple local acquirers, increasing administrative complexity.
• Compliance considerations: Each country has specific rules for data security, reporting, and regulatory compliance, adding complexity to the process.

For companies with a large customer base in specific regions, local acquiring offers cost and experience benefits that can increase customer loyalty and streamline payments. For more on approval rates, see our deep dive on payment approval rates.

Global acquiring: streamlining payments for international expansion

Global acquiring allows businesses to process payments across multiple regions through a single acquiring partner. This approach is ideal for businesses seeking rapid global growth without managing multiple local acquirers.

Advantages of global acquiring:

• Consistent payment experience: Using a single acquirer provides a unified, streamlined payment experience for customers worldwide.
• Simplified setup: Businesses can work with a single acquirer, reducing the need to manage multiple acquiring relationships.
• Scalability: Global acquiring allows companies to expand into new regions without needing to establish local acquirer relationships.

Drawbacks:

• Higher cross-border fees: Since transactions may be treated as cross-border payments, fees may be higher than with local acquiring.
• Potential declines on cross-border payments: Some banks may decline international transactions due to perceived risk, which can affect approval rates.

Global acquiring is best suited to businesses prioritizing speed and scalability over transaction fees and aiming for a consistent payment experience across markets.

FAQs about card acquiring for international markets

What is card acquiring?
Card acquiring is the process by which a financial institution (acquirer) enables a business to accept card payments. The acquirer manages transaction authorization, security, and fund settlement, allowing merchants to receive payments.

What is the difference between card acquiring and processing?
Card acquiring involves managing the business’s merchant account and settling payments, while card processing refers to the technical workflow of routing transaction data between the merchant, acquirer, issuer, and card networks.

What is local acquiring?
Local acquiring is when a business works with an acquirer in the same country as its customers. This approach reduces fees, improves approval rates, and allows payments in the customer’s local currency.

What is the benefit of cross-border payments?
Cross-border payments allow businesses to accept payments from international customers without needing local acquirers. Although convenient, cross-border transactions often come with higher fees and regulatory considerations.

Why choose global acquiring?
Global acquiring provides a single acquiring partner for processing international payments, simplifying operations for businesses expanding across multiple regions. It’s ideal for companies seeking scalability and consistency in payment processing.

Is Visa an acquirer?
No, Visa is a card network that facilitates communication and data transfer between issuing and acquiring banks. It is not an acquirer itself but enables transactions on behalf of acquirers and issuers.

Choosing the right card acquiring strategy can make a significant difference for businesses in international markets. From reducing fees with local acquiring to streamlining global payments with a single partner, each strategy has unique benefits depending on a company’s target markets and goals. By implementing an informed card acquiring approach, businesses can optimize payments, reduce costs, and improve customer experience across regions.

Looking to streamline your card acquiring process for international markets? Contact Gr4vy to learn more about how our payment orchestration solutions can support your business with secure, flexible, and efficient global payment options.