What is acquiring: definition, types, advantages

What types of acquiring are there

There are several types of cashless payment acceptance: trade, virtual, mobile, 4ATM and via QR code. How do they differ?

Trade

It involves cashless transactions using POS terminals. This type of acquiring is usually used in the restaurant and hotel business, at gas stations, train stations, shops, pharmacies, cinemas, SPA salons, and fitness clubs.

Internet acquiring

It is about online purchases. No additional equipment is needed, and transactions are carried out via a virtual interface that maintains the confidentiality of payment data during transmission. This type of acquiring uses bank cards and electronic money, and to activate it, you need a website that meets the banking criteria.

Acquiring with a smartphone (mobile)

It isn’t tied to a specific location: payments are accepted anywhere via a tablet/smartphone or mPOS terminal. Unlike traditional stationary POS terminals, mPOS can work via mobile networks or Wi-Fi, which makes it possible to accept payments anywhere. It is often used by small businesses, delivery services, or in cases where flexibility and mobility are needed when processing transactions, and it can be managed via the acquiring bank's application.

4ATM

This is acquiring using ATMs/terminals that have some payment option – for example, account replenishment, payment for utilities, Internet.

Use of a QR code

A type of cashless payment for small businesses using the Fast Payment System, but without a POS terminal. The user needs to open the banking application > scan the seller's QR code > transfer funds. In such acquiring, a reusable QR is used, assigned to the company (with details) or a new one is generated for each transaction using the program.

Why a trade business needs acquiring

Using the technology allows you to increase audience loyalty, optimize payment processing, minimize errors, hassle and risks associated with cash.

The specific advantages of acquiring are:

• increase in the number of transactions. Firstly, customers can buy a product/service even if they don’t have cash. Secondly, most users choose to pay by card due to bank cashbacks. Thirdly, customers are more willing to part with money they haven’t held in their hands – that is, from a card. The average increase in a company’s income after implementing acquiring is 10%;

• fast transactions, short queues. Payment via a terminal takes a couple of seconds. Cashiers don’t count money manually. Customers are served faster (which is especially important during busy hours);

• minimization of costs and risks. With cashless payments, company employees won’t make mistakes with the change. Cash collector services are also cheaper (and take less time). Regarding counterfeit bills: although the terminal won’t protect against counterfeits, it reduces the possibility of accepting counterfeits, reducing cash turnover.

The key is how acquiring affects the reputation of a business: in the eyes of customers, a company that uses cashless payments looks modern and reliable. High-quality service, including more convenient customer service, is a major advantage over competitors.

Does acquiring have any downsides

Any equipment fails. And when the connection with the bank is broken, the system refuses to process the payment. Buyers regularly observe this in some retail outlets. What to do? Sign a contract with a reliable Internet service provider, carefully choose a credit organization.

Also, acquiring is not always a profitable option for individual entrepreneurs and small companies, since sales and the number of clients are small, and you have to pay for the equipment and its technical maintenance.

There is a risk of fraudulent schemes. The client pays for the goods with a card > there is a manipulation with the details > the account is blocked > the store must return the funds to the buyer. The business itself will only compensate for the losses if law enforcement agencies catch the fraudsters.

Technology in action

Let's take a step-by-step look at what acquiring is and who participates in it:

1. Payment data is sent from the customer's smartphone/bank card to the terminal.

2. There is a bank with which the seller company has signed an acquiring agreement. The customer's information goes to the center of this bank.

3. The buyer's bank card belongs to the issuing bank, which sends data to the payment processing system. The information is checked for funds and account seizure/blocking.

4. If there are violations, the transaction is canceled. If not, the data goes back to the issuer.

5. The client's account balance and transaction amount are compared. A search is carried out for fraudulent schemes and a match of the PIN code.

6. When the checks are complete, a response is given on the transaction.

7. The information goes to the acquiring bank, then to the terminal. The issuing organization of the buyer receives confirmation of payment.

8. Funds are withdrawn from the client's account, received by the acquiring bank, then by the seller.

Acquiring (if there are no failures) takes a couple of seconds, despite the described chain of operations. The seller does not receive payment immediately, but after a few days (their number is specified in the contract). The transaction amount is blocked on the client's account, becoming inaccessible.

Is it obligatory for a company to open an account with an acquiring bank

Companies need a current account to pay taxes, calculate salaries, and conduct transactions. It is not obligatory for an individual entrepreneur, but it is possible if desired. Acquiring is provided by a small number of banks, and if a company already has an account with another bank without a processing center, it will have to connect an intermediary to its details. An alternative is to change the credit organization. Some credit organization, for example, give their customers a bonus/discount on terminals. And there are those who refuse to become an acquirer.

What are the conclusions? Acquiring and a current account can be held in different banks, but this is more expensive to maintain, and funds are credited longer. Therefore, it is more profitable to open an account with an acquiring bank.

Internet acquiring vs. trade acquiring: which is more expensive and why

First, let's compare the work of these two types.

	Trade acquiring	Internet acquiring
Step 1: buyer’s choice.	The product/service is selected at an offline retail outlet.	The search is conducted on the company's website and on its social media.
Step 2: payment.	• the client pays using a card via a terminal/contactless using a smartphone; • the terminal transmits data to the acquiring bank	• card details are entered on a special internet page with data protection; • information is sent to the acquirer.
Step 3: transaction.	The transaction is described step by step above – in the “How the technology works” section.	Similarly.
Step 4: completion of the transaction.	• a POS terminal receipt serves as confirmation of successful payment; • funds from the client's bank card are sent to the seller.	• the transaction amount is reserved on the client's card, then written off after the transaction is approved; • the money goes to the seller.

As can be seen from the comparison, Internet acquiring is an analogue of trade with minor differences. However, the first is more expensive than the second, as the company bears additional costs to process and protect the data. Also, the risks of fraudulent schemes on the network are higher.

Connecting trade acquiring: key points

When connecting the option, companies must check the following:

1. To what extent does the business turnover allow using the acquiring bank's tariff? Does the bank impose fines if the turnover decreases (after the start of cooperation).

2. What is the maximum period for crediting funds to the account and what liability does the acquirer bear for violating the deadline.

3. How long does the bank check the company's documents and decide to provide trade acquiring.

4. What is included in the terminal costs. Sometimes only rent and purchase are paid, sometimes installation, setup, and instructions are also paid.

5. Is there terminal maintenance?

6. What payment systems does the POS terminal support?

7. Does the terminal support contactless payment.

Conclusions

To summarize: what is acquiring and what are its advantages?

The technology enables businesses to receive payments for services/goods using customers’ bank cards. It has several varieties and customization options. Connecting the option helps a company increase the speed of service, increase the number of purchases, minimize hassle and errors with cash, and reduce the risk of becoming a victim of fraud. To implement all this, a business needs to sign an agreement with an acquiring bank.

PAYGATE is a company accredited by the National Bank of Kazakhstan as a payment organization and provides information technology and payment services. We offer our clients the connection of trade acquiring through modern POS terminals that support various payment methods. We also help implement mobile acquiring and payment via QR code. Do you want to know which option will be most beneficial for you and how to connect it? Contact PAYGATE to get answers to your questions and start cooperation!