Next-Generation Acquiring: Market Dynamics and Transformations

The acquiring landscape is on the brink of a significant transformation driven by market dynamics, regulatory changes, and evolving consumer payment preferences. A recent report by BPC highlights the imperative changes required for acquirers to adapt and thrive in this rapidly evolving ecosystem. This article delves into the major shifts forecasted in the acquiring sector and the new capabilities required for success.

The Evolving Acquiring Landscape

Increasing Electronic Transactions and Diverse Payment Options

The acquiring sector is facing a paradigm shift, driven primarily by an exponential increase in electronic transactions and a diversification in consumer payment options. By 2030, electronic transaction volumes are projected to reach an astounding 4 trillion annually. This surge necessitates acquirers to innovate and deliver cost-effective solutions to merchants while addressing new payment types and emerging fraud vectors.

Regulatory Pressures and Fraud Prevention

Regulatory changes, such as the anticipated EU’s third Payment Services Directive (PSD3), alongside evolving fraud detection and prevention techniques, further complicate the acquiring landscape. Acquirers must adopt systems that are not only flexible in compliance but also robust in detecting and preventing new forms of fraud, including Account Takeover (ATO), synthetic ID, and Authorised Push Payment (APP) fraud.

Essential New Capabilities

Transition to Cloud-Ready Platforms

To cope with the evolving demands, acquiring systems must transition to cloud-ready platforms with open-source architectures. These platforms should be capable of handling massive transaction volumes while supporting diverse payment types, from QR-code payments to instant Account-to-Account (A2A) transactions. The shift to such scalable and flexible systems is crucial for acquirers to maintain competitiveness.

Integration and Compliance Flexibility

The ability to seamlessly integrate new systems is vital. This includes incorporating existing fraud solutions like 3D Secure (3DS) and developing new fraud management modules. Additionally, these systems need to ensure compliance with upcoming regulations and adapt swiftly to technological advancements in fraud prevention.

Delivering Optimal Value and Service

Payments Orchestration and Data Utilization

As merchants demand more from their acquirers, the ability to manage various elements of the payment process, known as payments orchestration, will become increasingly important. This capability allows merchants to extract optimal value from acquirers through a comprehensive end-to-end solution. Utilizing rich transaction data based on the ISO 20022 messaging standard, merchants can enhance inventory management, innovate product offerings, and improve customer experiences.

Cost Efficiency and Rapid Feature Deployment

Acquiring systems of the future must demonstrate low ongoing costs of ownership while under pressure to provide more features for less revenue. Rapid and frictionless deployment of new features is essential to maintain and grow revenue streams. This need for agility and cost-effectiveness will dictate the success of acquiring solutions in the coming years.

Conclusion

The acquiring sector stands at a crossroads, with significant changes driven by regulatory, technological, and market forces. To remain relevant and competitive, acquirers must embrace next-generation systems that offer scalability, compliance flexibility, and advanced fraud prevention. As merchants seek comprehensive solutions that provide optimal value, acquiring systems must evolve to meet these demands while maintaining cost efficiency. BPC's report provides insights into the necessary transformations for acquirers to stay ahead in this dynamic landscape. To explore these insights further, accessing their detailed report is highly recommended.