Katrin Boettger: The acquiring world is changing rapidly. How can acquirers best prepare for the next decade?
Carlos Perez Rubio: Acquirers indeed face a number of major challenges. I think most acquirers understand by now that simply facilitating an acceptance ecosystem for credit card payments is not enough to survive. They need to think carefully, understand the changes that are happening and act fast.
KB: What are the major changes they need to take into consideration?
CPR: First, acquirers need to prepare for higher and more diverse demand in terms of payment methods. In some countries, mobile wallet adoption has exploded in recent years, for example Brazil, Thailand and Kenya. According to ACI’s recent report Prime Time for Real-Time, we also expect a massive growth in real-time payments, including in India and the U.S. In China, QR code payments have been popular for years, but they are now also taking off in other countries. Consumers and markets have become unpredictable and acquirers need to prepare accordingly.
KB: What should acquirers do in this new, unpredictable world of payments?
CPR: The new mantra for acquirers consists of three pieces of advice: scale and diversify, speed and efficiency, and differentiation. We suggest two approaches: First, in order to handle increased volumes and offer value-added services, acquirers should build a new payments hub, update their current system or use a combination of both. Regardless of the approach, they should also consider moving their systems into the cloud, as it offers agility and scalability at an affordable cost as well as giving them the ability to launch new services quickly.
KB: How will the global advancement of real-time payments impact acquirers?
CPR: Understanding the nature and adapting to the growth of real-time payments will be crucial for acquirers to thrive. Acquirers in established markets, like the U.K. for example, will need to find ways to transact more efficiently, maximizing the profit from each payment, while also meeting market demands by developing value-added services to find new revenue streams and retain merchant loyalty.
In contrast, the U.S. is still very much a developing market; however, the quantity of U.S. real-time transactions is set to increase six-fold by 2024 to 4.2 billion. There, acquirers will need to be ready to process a big uptick in transaction volumes and enable merchants to accept account-to-account payments.
KB: Are acquirers ready to innovate in order to take on the challenges ahead?
David Gale: It is fair to say that until now, there has been a lack of innovation on the side of acquirers. We have seen innovation on the front, but not so much when it comes to the core platforms. That needs to change. Building real-time capabilities in the core will be key for us and important for all acquirers.
Flexibility will also be crucial because – as Carlos explained – we can’t 100 percent predict which payment methods will take off in the future.
KB: What will be the short and long-term impacts of the COVID-19 pandemic for acquirers?
George Peabody: The pandemic will without doubt speed up the advance of real-time payments and new digital payment methods. So, acquirers need to be ready to process increased real-time payments volumes. Along with this, they will need to be able to handle increased volumes of data. The crisis is also going to accelerate the move to increased software deployment in the cloud, as more financial institutions come to realize that the cloud is secure and cost-efficient.
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