Global acquiring 101: A guide to cross-border payments

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  1. Introduction
  2. What is global acquiring?
  3. How does global acquiring work?
  4. Benefits of global acquiring
  5. Challenges and barriers associated with global acquiring
  6. What types of businesses use global acquiring?
  7. Can businesses use both local and global acquiring?
  8. Does Stripe enable global acquiring?

Expanding internationally comes with an extensive set of challenges, from high-level strategic decisions to granular practical considerations. Among these are the requirements of cross-border payment processing. To successfully navigate international transactions, businesses must deal with obstacles like higher failed transaction rates, multiple sets of compliance and regulatory guidelines, currency conversions and the need to adopt a wide range of locally optimised payment methods.

In response to these challenges, global acquiring has emerged as a comprehensive solution for businesses that want to enhance their transaction success rates and simplify their payment processes. In 2021, the global merchant acquiring market was worth nearly US$28 trillion and is projected to reach nearly US$42 trillion by 2026. For businesses operating across diverse countries or regions, global acquiring can play an important role in protecting international revenue streams, improving customer experience and maintaining optimal security and compliance at every touchpoint.

Below, we’ll discuss global acquiring: what it is, how it works, its benefits, challenges and applications, and how platforms like Stripe facilitate this process.

What’s in this article?

  • What is global acquiring?
  • How does global acquiring work?
  • Benefits of global acquiring
  • Challenges and barriers associated with global acquiring
  • What types of businesses use global acquiring?
  • Can businesses use both local and global acquiring?
  • Does Stripe enable global acquiring?

What is global acquiring?

Global acquiring is a payment processing practice in which the acquirer – the institution handling payments on behalf of the business – has the ability to process transactions worldwide, regardless of the country in which the payment originates. This approach stands in contrast to local acquiring, in which the acquirer and the origin of the payment are located within the same country.

Global acquiring allows businesses to accept payments across a variety of environments, interacting with multiple international issuing banks – the institutions that issue customers’ credit and debit cards – and payment methods. Through global acquiring, businesses can extend their reach, offering their products or services to a wider customer base. For businesses with international ambitions, there are numerous benefits to adopting global acquiring, which we’ll discuss further below.

How does global acquiring work?

Global acquiring is the process that allows a business to accept and process card payments from customers around the world. Here's how it works, step by step:

  • Merchant account setup
    First, a business must establish a relationship with a global acquiring bank or a payment service provider (PSP) that offers global acquiring services. This means setting up a merchant account which the business will use for international transactions.

  • Transaction initiation
    When a customer anywhere in the world decides to make a purchase with a credit or debit card, the payment data – their card number, CVV code (if applicable) and other key details – is passed from the business to the acquirer.

  • Transaction authorisation
    The global acquirer sends this transaction data to the card network (Visa, Mastercard, etc.), which forwards it to the issuing bank.

  • Authorisation response
    The issuing bank approves or declines the transaction based on various factors like the customer's available balance and the potential for fraud. The issuing bank sends the response back to the business through the card network and the acquirer. If the transaction was declined, the response will include a decline code that explains why the transaction couldn't be authorised.

  • Settlement
    If the transaction is approved, the issuing bank sends the funds to the acquirer, which deposits the funds into the business’s main business bank account. This part of the process can take a few working days, depending on the PSP.

  • Currency conversion
    If the transaction was made in different currency to that of the merchant account, the acquirer or the card network will handle the currency conversion.

  • Risk and compliance management
    Typically, global acquirers also assist with managing fraud risk, ensuring compliance with local and international regulations and dealing with chargebacks and disputes.

This process takes only a few seconds to complete and is largely invisible to the customer. However, behind the scenes, the global acquiring process involves multiple parties and steps. The fundamental value of PSPs that support global acquiring lies in how they manage this complexity for businesses.

Benefits of global acquiring

Global acquiring offers several advantages for businesses, particularly for those that operate internationally or have plans to expand their operations beyond their home country. Global acquiring offers businesses the following:

  • International reach
    With global acquiring, businesses can accept payments from customers around the world without being hindered by currency conversion, communication between international banking entities, disjointed payment networks or overlapping compliance and regulatory considerations. This access opens up a new and vast potential customer base, and can significantly increase sales and revenue.

  • Currency conversion
    Global acquirers typically handle currency conversion, which simplifies transactions for customers and ensures that businesses receive payments in their preferred currency.

  • Payment method diversity
    International payments require more than just currency conversion –payment method accommodation is a significant consideration for businesses that want to operate globally. Global acquirers can handle an expansive range of payment methods, giving businesses the ability to accept the methods that customers prefer in each of their international markets.

  • Compliance and risk management
    Global acquirers have experience in dealing with regulatory environments in multiple countries. They can help ensure that transactions are compliant with local laws and regulations, and assist with risk management, including detecting and preventing fraudulent transactions.

  • Improved authorisation rates
    In the world of electronic payments, authorisation rates are very important – and global acquirers have invested the time and resources into optimising their ability to generate high performance in this area. As global acquirers have relationships with banks around the world, they can often provide improved authorisation rates for international transactions. This means fewer declined transactions and a better customer experience.

  • Unified reporting and reconciliation
    When they work with a global acquiring solution, businesses can streamline their financial management by using the solution’s unified platform for reporting and reconciling transactions across all markets.

  • Cost efficiency
    Global acquiring can potentially reduce costs associated with cross-border fees. This is due to the ability of global acquirers to process payments locally in multiple countries, rather than having to route them internationally.

In addition to these benefits, one hidden advantage of global acquiring is the potential to create customer trust and brand loyalty. As businesses make it easier for international customers to purchase goods and services, those customers are more likely to view the business as a reliable, customer-centric organisation. In today's increasingly globalised marketplace, this type of trust can be a significant competitive advantage.

Challenges and barriers associated with global acquiring

While global acquiring can open up significant opportunities for businesses to extend their reach to international customers, it's important to be aware that this process can also bring its own set of challenges. Here are some of these potential barriers:

  • Complex regulatory environments
    Every country has its own rules and regulations around payment processing. For example, data protection laws can vary greatly between the European Union and the United States. Complying with the EU's General Data Protection Regulation (GDPR) while also ensuring compliance with US laws can pose a significant challenge. Businesses and their acquiring banks must work diligently to stay up to date and in line with these ever-evolving regulations, which can require significant time and resources.

  • Currency management
    While one of the key benefits of global acquiring is currency conversion, managing multiple currencies can still present complications for businesses. For instance, a British business that accepts payments in Japanese yen will need to navigate exchange rate fluctuations: if the yen weakens against the pound, this could result in the business receiving less revenue than expected. Additionally, there may be costs associated with converting these currencies, which could impact the business’s bottom line.

  • Fraud and security risks
    Dealing with international transactions can increase a business’s exposure to fraud and security risks. Different regions may have varying levels of credit card fraud, and acquirers must be able to detect and prevent these fraudulent activities. For instance, a business expanding into a new market may face unfamiliar fraud patterns and might need to implement additional security measures such as two-factor authentication or stricter payment screening.

  • Cultural and consumer behaviour differences
    Consumer behaviour and preferred payment methods can vary greatly from one region to another. For example, while credit card payments are common in the US, other countries show a strong preference for direct debit methods or mobile payments. Understanding these market-specific nuances and integrating different payment methods is an important aspect of global acquiring.

  • Managing multiple relationships
    Depending on the global acquiring strategy, a business might need to manage multiple relationships with various local acquirers, which can increase operational complexity. To streamline this process, some businesses may opt to work with a single global acquirer that has multiple local partnerships.

  • Dispute handling and chargebacks
    Navigating dispute resolution and chargeback rules can be more complex in a cross-border context. Understanding the rules and timelines across different card networks and jurisdictions is important to manage chargebacks effectively and maintain good standing with the acquirers and card networks.

While these aspects of global acquiring might seem daunting, they are manageable with the right strategies, technologies and partners. The key is to understand these challenges and find an experienced global acquiring partner that can guide your business through these issues.

What types of businesses use global acquiring?

Global acquiring is particularly beneficial for businesses that operate internationally or have ambitions to expand their operations globally. A wide variety of industries can benefit from global acquiring services. Here are a few examples:

E-commerce retailers
Businesses that sell products online can benefit from global acquiring services. For instance, a fashion retailer based in France might decide that they want to sell their products to customers in the US, Australia and Japan. Without a global acquiring solution, managing the different payment methods and currencies that customers prefer in those markets would be a complex task. Global acquiring streamlines this process, making it easier for the retailer to expand their customer base globally.

Digital services providers
Companies that offer digital services, such as streaming platforms, online gaming companies or software-as-a-service (SaaS) providers, can also benefit from global acquiring. Often, these businesses have customers all over the world. A music streaming service, for example, may have subscribers in dozens of countries, each with its own preferred payment methods and currencies.

Travel and hospitality companies
Airlines, hotel chains and online travel agencies often use global acquiring services. These businesses serve customers – from all over the world – who book flights, hotels or holiday packages. For instance, a hotel chain headquartered in the US may have properties in Europe, Asia and South America, and therefore would need to accept payments from customers in each of these regions.

Education and online learning platforms
Universities that offer online courses to international students or eLearning platforms that provide courses globally require a system to accept payments from many countries. Global acquiring allows these institutions to accept payments from international students and learners, contributing to a smoother enrolment process.

Subscription-based services
Whether it's a fitness app, a digital newspaper or a monthly beauty box, businesses operating on a subscription model often serve customers from all over the world. With global acquiring, subscription-based services can manage recurring payments from different countries more efficiently.

In all of these examples, the ability to process cross-border transactions effectively is important to business operations. By using global acquiring, these businesses can accept payments in multiple currencies, offer a range of payment methods to suit local preferences and navigate the complexities of international payment regulations and compliance. As a result, they are better equipped to provide a smooth payment experience for their customers, no matter where those customers live.

Can businesses use both local and global acquiring?

Businesses do not necessarily have to choose between local and global acquiring; many use a combination of these strategies to meet their needs.

Local acquiring can offer advantages like higher authorisation rates and lower transaction costs in the domestic market, given the direct relationship with the local issuing banks. This can be especially valuable for businesses that have a strong presence in their home market.

Global acquiring, on the other hand, allows businesses to accept and process payments from customers worldwide, providing the ability to expand their customer base and accommodate cross-border transactions. This is particularly important for businesses that operate internationally or seek to grow their global presence.

Many businesses that operate globally use a mixed strategy. They might use local acquiring in their core markets, where they have a significant customer base and the volume of transactions justifies maintaining a local acquiring setup. Simultaneously, they may use global acquiring for transactions in international markets or countries where they have less business activity.

Choosing the right mix depends on several factors, including the nature of the business, the markets in which it operates, global expansion plans, the volume and value of transactions, and customer preferences. Often, the best approach is to work with payment partners that offer flexibility and can support both local and global acquiring strategies, adapting as the business's needs and markets evolve.

Does Stripe enable global acquiring?

Yes, Stripe provides support for global acquiring through its expansive global payments infrastructure. By using a comprehensive suite of APIs and extensive network of partner banks, Stripe empowers businesses to facilitate and manage global acquiring in more than 195 countries across the world.

Stripe’s global acquiring capabilities hold many advantages. Businesses can achieve the basic goal of global acquiring – efficiently processing international transactions and catering to a diverse global customer base – while accessing a multitude of payment methods popular in different regions, navigate currency conversions and handle compliance with international payment regulations, all while using Stripe's powerful and user-friendly platform.

Here's how Stripe's features enable businesses to benefit from global acquiring:

  • Broad global coverage
    Stripe operates in 46 countries, allowing businesses to process payments from customers in a wide range of markets. This extensive reach, combined with partnerships with financial institutions worldwide, facilitates efficient global acquiring without the need for businesses to form individual banking relationships in each country.

  • Unified platform
    Stripe provides a single, unified platform, enabling businesses to manage all their transactions – both domestic and international – through one interface. This simplifies operations and eliminates the headache of dealing with multiple acquirers or payment processors.

  • Currency conversion and handling
    Stripe supports transactions in more than 135 currencies. This makes the process of currency conversion simpler for businesses that operate in multiple markets, alleviating some of the complexities of international transactions.

  • Compliance and risk management
    Stripe keeps pace with regulatory changes in the countries where it operates, easing the burden on businesses around compliance with different international payment regulations. Also, Stripe offers tools for managing risks associated with cross-border transactions, such as fraud detection.

  • 24/7 support
    Stripe provides round-the-clock customer support to businesses navigating the intricacies of global payments and acquiring. Stripe's support team is always available to resolve issues, answer queries and provide guidance to businesses.

  • Intelligent routing
    Stripe uses smart routing algorithms to optimise transactions at a global scale. It directs transactions to the optimal partner acquirer by considering factors like the country of the issuing bank and the card type. This boosts authorisation rates and enhances payment performance.

Setting up global acquiring can seem like a major undertaking, but with providers like Stripe, the process becomes much more manageable. By opting for a payments platform that supports global acquiring, businesses can navigate the associated challenges and fully harness the benefits of this strategic approach to payment processing. For a deeper understanding of how Stripe enables global acquiring within its suite of customised solutions for global businesses, start here.

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