Acquirer fee optimization in Europe: Strategies for faster authorization and lower costs

Payments drive revenue, but they also carry significant cost. For European merchants, acquirer fees are one of the largest ongoing expenses in payment acceptance. These fees cover processing, settlement, and network access, but they vary by market, transaction type, and provider.

Optimization is more than cost reduction. Lower acquirer fees combined with higher authorization rates directly improve conversion and margins. Merchants expanding across Europe cannot treat acquiring as a fixed expense. They must treat it as an area for continuous optimization.

Understanding acquirer fees

Acquirer fees are what merchants pay to their acquiring bank or PSP to process transactions. These fees typically include three main components:

• Interchange fees: Paid to the cardholder’s bank. Regulated in the EU for consumer cards.
• Scheme fees: Paid to card networks like Visa and Mastercard for using their infrastructure.
• Acquirer markup: The margin the acquiring bank or PSP charges the merchant.
  

The total cost per transaction depends on card type (debit, credit, corporate), country, and whether the transaction is processed domestically or cross-border.

For merchants with high volumes, even small differences in acquirer fees add up to significant costs. Without visibility and control, many businesses overpay and suffer lower approval rates.

The European context

Europe is a unique payments region. The EU has capped interchange fees for consumer cards under the Interchange Fee Regulation (IFR) at 0.2% for debit and 0.3% for credit. This creates a level of predictability. But scheme fees and acquirer markups remain variable, and corporate and commercial cards are not capped.

Differences also emerge from:

• Domestic vs cross-border acquiring: Domestic processing usually yields higher approval rates and lower costs. Cross-border acquiring often carries extra fees and lower authorizations.
• Currency conversion: Non-eurozone markets like the UK, Sweden, or Denmark introduce FX costs.
• Market preferences: In countries such as Germany, alternative methods like bank transfers reduce reliance on card acquiring. In the Netherlands, iDEAL dominates online transactions, limiting card volumes.

For merchants operating in multiple European countries, the acquiring strategy must adapt to each local context.

The link between acquirer fees and authorization rates

Many merchants focus only on reducing headline fees. But authorization rates play an equally critical role in the total cost of payments. A low authorization rate increases the effective cost per successful transaction.

Example:

• If authorization rates are 95%, fees on 100 transactions apply to 95 approved.
• If authorization rates drop to 85%, fees still apply to 100 attempts but only 85 succeed.
  

That gap increases the cost of each approved payment.

Authorization rates often improve with local acquiring. Processing transactions domestically reduces declines linked to fraud checks, cross-border mismatches, or issuer preferences. Dynamic routing and network tokenization also help reduce soft declines, further improving approval rates.

Merchants must consider both sides: lowering fees and raising approvals. This is where acquirer optimization becomes a strategic lever, not just a cost-saving exercise.

For more detail on the role of wallets and alternative methods in Europe’s authorization landscape, see our analysis of digital wallets in Europe.

Why optimization matters now

Three forces make acquirer fee optimization more urgent in Europe:

1. Regulatory pressure: With interchange capped, acquirer markups and scheme fees are the main levers for cost management.
2. Consumer habits: Wallets, instant payments, and local schemes are changing transaction flows, but cards remain central in many markets. Optimizing card acquiring is still crucial.
3. Cross-border expansion: Merchants growing across the EU need multiple acquirer relationships. Without orchestration, this complexity is hard to manage.
   

Merchants that treat acquiring as static risk higher costs and lower conversion. Those that optimize achieve not only lower fees but also smoother checkout and higher approval rates.

Strategies for acquirer fee optimization

Merchants have several levers they can pull to optimize acquirer costs while improving authorization rates.

Multi-acquirer setup

Working with more than one acquirer allows merchants to compare costs and performance. Relying on a single acquirer means accepting their fee structure and approval rates with no benchmark. Multi-acquirer setups introduce competition and flexibility.

Smart transaction routing

Merchants can route each transaction to the acquirer offering the best chance of approval at the lowest cost. A transaction from a French cardholder may perform better with a domestic acquirer than a cross-border one. Dynamic routing ensures each payment follows the best path.

Local acquiring

Domestic acquiring often avoids cross-border fees and increases approval rates. Issuers are more likely to approve transactions that appear local. Merchants processing in multiple EU countries benefit from having local acquiring options to reduce declines and lower costs.

Tokenization and retry logic

Card tokenization ensures secure storage while enabling intelligent retries on soft declines. Instead of losing a transaction, merchants can reattempt it with a different acquirer. This lowers lost revenue and improves conversion.

Data-driven negotiation

The more data you have, the stronger your position in negotiations. Merchants who track transaction volumes, approval rates, and routing performance can approach acquirers with hard numbers to argue for lower fees.

For an overview of why flexibility and resilience matter in these strategies, see our guide on payment orchestration vs PSPs in Europe.

How payment orchestration supports optimization

Optimizing acquirer fees across Europe is complex without orchestration. Merchants would need multiple direct integrations, data pipelines, and manual routing. Payment orchestration centralizes and automates these functions.

• Single integration: One connection to an orchestration layer provides access to multiple acquirers.
• Real-time monitoring: Merchants see performance data by acquirer, geography, and transaction type.
• Automated failover: Transactions route to a backup acquirer instantly during outages.
• Centralized reporting: Unified dashboards make it easier to identify cost savings and negotiate fees.
• Cross-border compliance: Orchestration supports PSD2, SCA, and local rules across markets, reducing compliance overhead.
  

Merchants can adapt quickly to market changes and regulatory shifts. This agility is critical in Europe, where regulation and consumer preference are evolving rapidly.

For context on how these shifts affect broader retail strategies, see our analysis of European retail payment trends in 2025.

Strategic guidance for European merchants

Merchants looking to optimize acquirer fees should:

1. Benchmark performance: Measure current authorization rates, costs, and declines across markets.
2. Adopt orchestration: Use a central layer to integrate multiple acquirers and monitor performance in real time.
3. Invest in local acquiring: Where volumes justify it, local acquiring reduces fees and improves approval rates.
4. Leverage data: Use transaction and routing data in negotiations to secure better acquirer terms.
5. Balance cost and customer experience: Lower fees are valuable, but higher approval rates often deliver bigger returns through improved conversion.
   

FAQ

What drives acquirer fees in Europe?

They are made up of interchange fees, scheme fees, and acquirer markup. Interchange is regulated for consumer cards, but scheme fees and acquirer markup vary widely.

How do cross-border transactions affect costs?

Cross-border acquiring often carries extra scheme fees and lower authorization rates compared to domestic acquiring.

Does using multiple acquirers lower fees?

Yes. Multi-acquirer setups introduce competition, give merchants flexibility, and allow routing to the lowest-cost option.

How do acquirer fees impact authorization rates?

Higher fees alone don’t guarantee approvals. Local acquiring and smart routing improve success rates, reducing the effective cost per approved transaction.

What role does orchestration play in fee optimization?

Orchestration centralizes acquirer management, enables dynamic routing, provides failover protection, and consolidates reporting for smarter negotiations.

Acquirer fees represent one of the most important cost centers in European payments. Optimizing them is not only about lowering expenses. It is about improving authorization rates, raising conversion, and delivering a smoother customer experience.

Merchants that adopt orchestration gain the flexibility to work with multiple acquirers, route transactions intelligently, and negotiate from a position of strength. In Europe’s fragmented market, this approach is essential for scaling efficiently.

Contact Gr4vy to see how payment orchestration helps reduce acquirer costs and improve authorization rates across Europe.