What is a Multi-Acquirer Payment Strategy and What are its Business Advantages?

We’re often asked by merchants what a multi-acquirer payment strategy is, what it means or why it’s important for their business. So we decided to clarify this in a beginner-friendly article where we’re going through the basics. Let’s dig in.

What is A Multi-Acquirer Payment Strategy? 

A multi-acquirer setup in the context of payment processing is a configuration where you, as a merchant, work with a payment service provider that partners with multiple acquiring banks or financial institutions to process your payment transactions. With single connection, you can get access to multiple processors, payment methods and currencies.

The Differences Between A Single Channel Solution And A Multi-Acquirer Approach

A single channel solution involves using just one acquiring bank or financial institution to process all your payment transactions. This means all your payments go through a single channel. This could lead to higher risks of service disruption if the acquirer experiences issues, and it might not offer the best transaction success rates or fees due to the lack of competition. Not to mention that you’ve got higher chances of losing your merchant account, as our customers often complain about this.  

A multi-acquirer solution, on the other hand, allows your business to work with multiple acquiring banks or institutions simultaneously. This strategy increases your flexibility by letting you route transactions through different acquirers based on criteria like success rates, transaction costs, and even geographical considerations. It can increase your approval rates, provide redundancy in case one acquirer goes down, potentially lower your costs, and give you access to a broader range of payment options suitable for different markets.

This payment routing, as it’s called, acts like a safety net, adding an extra layer of redundancy on your operations, and offers better flexibility. 

Figure 1: Connect to multiple processors via a single platform. How does it work?

Advantages Of The Multi-Acquirer Approach

This approach offers multiple advantages, relevant if your business is aiming to scale and diversify its customer base across different markets. One of the primary benefits is the increased choice it provides to both partners and merchants. By integrating multi-acquirer processing and dynamic routing within a single framework, businesses can leverage the competitive edge of negotiating better pricing and optimizing acceptance rates across various acquirers by BIN range, region, and payment method.

Having a multi-acquirer payment strategy has become a solid asset for digitally native businesses. This strategy increases operational resilience and flexibility and it enhances the customer payment experience by offering a broad spectrum of payment options. 

• Access to more markets is another significant advantage. The global nature of eCommerce needs a payment infrastructure that can support diverse market needs. A multi-acquirer strategy facilitates access to broader markets by incorporating local payment schemes that may not be supported by all acquirers. This is particularly relevant in countries where local payment methods, such as GIE Cartes Bancaires in France and Dankort in Denmark, are predominant. This bridges the gap between global businesses and local consumer preferences but also significantly reduces friction in payment processes, improving the overall likelihood of transaction completion. By partnering with acquirers that support these local schemes, your businesses can cater to the payment preferences of a wider customer base, making it easier to enter the market and to gain relevance.
• Operational resilience in the digital payment ecosystem. With a multi-acquirer setup, your business can easily redirect payment traffic in the event of an acquirer platform outage, which enables continuous transaction processing. Such a setup acts as a critical failsafe mechanism, ensuring that your operations are not dependent on a single point of failure. This capability is invaluable in maintaining operational uptime and safeguarding against potential revenue loss and customer dissatisfaction during outages. This level of operational resilience is crucial in the fast-paced eCommerce environment, where customers expect instant gratification and any delay can lead to lost sales. 
• Business continuity & an omnichannel experience. The distinction between online and offline commerce is increasingly blurring, with customers expecting a sleek omnichannel experience, which in turn needs a payment infrastructure that is both versatile and inclusive, capable of supporting a wide array of payment methods and channels. A multi-acquirer strategy supports this by offering unified commerce solutions that bridge the gap between eCommerce and physical retail. It means that whether a customer is shopping in-store, online, or through a mobile application, they receive a consistent and seamless checkout process. This consistency is key to building trust and loyalty among your consumers, who value ease and reliability in their shopping experiences more and more. By integrating digital wallets like Apple Pay and Google Pay across multiple acquirer Merchant IDs (MIDs), you can provide consistent payment options regardless of the sales channel, enhancing the customer experience.

• Better fees for transactions & settlement. The multi-acquirer approach introduces competition among the various acquirers. With multiple acquirers at your disposal, you can negotiate better rates based on volume, transaction types, and other factors. This competition incentivizes acquirers to offer lower fees to secure or maintain your business. This way, by analyzing and routing transactions to the acquirer with the most favorable rates for a specific transaction type or region, you can reduce costs associated with payment processing and settlements.

At the heart of a successful multi-acquirer strategy is the partnership between Payment Service Providers (PSPs) and their acquirer partners. It's the collaborative effort and mutual appreciation of the value each party brings to the table that enables businesses to leverage the full benefits of this approach. Our acquirer partners play a crucial role in providing the diverse, flexible payment solutions that our customers depend on to thrive in the global digital economy.

If you’re looking for a payment service provider, make it a priority to choose a partner that offers compliance, a great degree of coverage of payment methods, processing fees, and security measures. We’ve covered this topic in more detail in "Choosing A Merchant Service Provider In 2024" article.

Takeaways

• A multi-acquirer payment strategy is a strategic business decision that can have an impact on a company's growth trajectory and customer satisfaction levels; 
• It offers a competitive advantage in pricing negotiations, market access, operational resilience, and customer experience; 
• For digitally native businesses that accept payments, this strategy brings extra flexibility, reliability, and reach; 
• As the digital marketplace continues to expand and evolve, the ability to adapt and offer diverse, secure, and efficient payment solutions will define the success of digitally native businesses;
• You can get better fees when the acquirers are in competition, as opposed to the single acquirer approach which acts like a monopoly in your transactions. 

At CatalystPay, we are committed to providing our partners and their merchants with the robust support and innovative solutions needed to thrive in this dynamic environment. 

Our primary concern, beyond infrastructure security, is helping your business achieve more of its potential through a partnership oriented approach. So if you’re currently looking for a payment service provider, or you’d like more information on the topic, don’t hesitate to reach out.