Acquirer processing is entering an interesting and challenging time. This vital part of the payment ecosystem – handling the processing of merchant transactions with the card networks – has been dominated for years by a handful of processing platforms. These solutions have been built on outdated technology that is over 30 years old.
While they have been able to process transactions from Point A to Point B, they have serious limitations (hard to maintain and upgrade, unable to deliver heavy payloads of data, slow to integrate, expensive to scale, etc.) that have frustrated users for years. The focus is often on firefighting and staying compliant rather than delivering innovation and solutions to merchants’ problems.
Acquirers in today’s payments landscape face more challenges than ever before. In addition to the challenges caused by using outdated technologies for their payment processing, they also now face new competition from innovative fintechs. These fintechs are dominating the market because they are addressing the challenges customers are facing due to the antiquated technology of legacy processors. Additionally, they are forcing traditional acquirers to face the reality that they must address this legacy processing technology by buying newer, more innovative solutions, or building it themselves.
Switching to another payment processor seems like an easy solution for these acquirers looking for more capabilities and innovations, but this too comes with its own set of issues for the acquirer.
Most legacy payment processors do not have the modern technology required to provide the data and innovation necessary to address customers’ needs. In addition, switching to a new payment processor can take years, as the acquirer is likely under a lengthy contract with the existing processor and the process of selecting a new vendor can be arduous.
To top it all off, a legacy processor will take months, if not years, to implement the new solution. When acquirers need a solution now to keep pace with the competition, they are looking at a lead time of one-two years minimum before they are able to implement a new processing solution. So, what if they build their own?
With the plethora of challenges posed by selecting a new payment processing vendor, it may seem much more appealing for acquirers to build their own processing solution. This would provide full control of the process, and enable the ability to build exactly to their specifications in theory.
However, building a processing solution from scratch is an expensive and time-consuming project that requires a deep understanding of both the technical and business requirements of processing a credit card transaction through the entire charge lifecycle (authentication, authorisation, clearing, reconciliation, chargeback, etc.).
Additionally, building a solution implies the ongoing maintenance and constant upkeep of new card network rules, regulations, and products. In most cases, processing is not their main business, so to keep investing into this area is only taking resources away from their core client services. This disconnection often results in build projects going well over time and over budget.
Often, acquirers may spend more than five years and hundreds of millions on a solution that might not be better than their existing one, and, in some cases, already out of date and non-compliant as soon as it is deployed into production.
With so many challenges in these two solutions, what can acquirers do to stay competitive?
Modern technology: The cloud offers a flexible and scalable infrastructure to build a modern processing platform.
Ease of use: The solution should offer easy APIs to make integration quick and reduce development resources.
Access to data: Ideally, the solution should have direct connections to the card networks and provide all transaction data. This would lead to more efficient and effective processing.
Ability to support global expansion: Acquirers should be able to expand into new countries/regions without lengthy and expensive certifications.
Interested in learning more about this modern payment processing solution? Contact Silverflow at info@silverflow.com.
Prior to joining Silverflow, Nadia has worked for multiple payments companies providing solutions to merchants, gateways, acquirers, and other payments' companies. She has over 14 years of experience in consulting and selling alternative payment methods, international acquiring, payments processing platforms, fraud prevention and FX tools. Nadia is part of the commercial team and is responsible for the relationships with new clients and growing the overall global client base within Silverflow.
Jonathan has held numerous client and partner-facing roles over the course of 18 years in payments. After several consulting roles, he started his career in payments in 2004 with ChasePaymentech, followed by stints at RBS Worldpay, Adyen, Vantiv, Silicon Valley Bank, and Gulf Oil. Jonathan is focused on expanding Silverflow's presence in the United States.
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