Cross-Border Merchant Acquiring: New Technology, New Competitorsby Rudy Gunawan, Managing Director of OpenWay Asia June 20, 2023
Cross-border merchant acquirers are busier than ever after the pandemic accelerated e-commerce worldwide. Moreover, they are getting a boost from global tourism, which is now “on track for full recovery” in 2023, according to the international arrivals data of U.N. World Travel Organization.
So the competition for cross-border payment processing is tougher than ever. But too often, incumbents are losing merchants to startups and even former partners – independent software vendors (ISV), independent sales organisations (ISOs) and payment service providers (PSPs) that have become licensed as acquirers.
In a 2022 report on payments disruptors, McKinsey concludes that merchant acquirers must act quickly to retain share by prioritizing value-added services and omnichannel commerce.
OpenWay, the provider of the Way4 platform for tier-1, mid-size and startup players, has observed many cases where a client has entered the merchant acquiring value chain as one species and evolved into a more powerful one. These are just a few remarkable stories:
- Nexi, a Pan-European acquirer, is undergoing an agile digital transformation, to ensure fast time-to-market, product flexibility and quick deployment across all service points. In 2020, despite all the complications of lockdown, it migrated over a million merchants to a single in-house Way4 installation.
- Finaro transformed from an e-commerce gateway in the Mediterranean into a global acquirer, issuer and provider of merchant banking services. In 2022 it was acquired by Shift4, the payments partner of SpaceX.
- Halyk Bank in Central Asia expanded from classic POS acquiring to also supporting QR payments for SMEs serving tourists.
- Planet Payments started as a PSP offering Dynamic Currency Conversion for luxury brands like Gucci, Chanel, and Burberry, and later became a full-fledged POS acquirer.
- A payment facilitator from CNBC’s Disruptor 50 List grew from a startup enabling payments for marketplaces into a B2B acquirer operating across 190 countries.
- SmartPay in Vietnam enabled SMEs to accept wallet payments and grew its portfolio to 700,000 merchants in just 3 years. Today, the SmartPay mobile wallet is predicted to become a super app, and connected merchants already have access to in-app value-added services, including BNPL and insurance.
- Equity Bank of Kenya was the world’s first ATM acquirer of M-PESA e-money. Today it is known as a wallet payments hub for various e-money brands across East Africa.
OpenWay has analyzed the technology choices and growth priorities of its clients, award-winning cross-border acquirers, and summarised its findings in a case study.
Summary of the findings in OpenWay’s case study
1. Data-driven high-level personalisation of merchant services
Hierarchical setup of merchants with flexible configurable accounting, billing, and reporting on each level; pricing and billing transparency; as well as unique BIN stoplists per merchant.
2. Advanced multi-currency options
DCC, MCC, and schemes that allow merchants and acquirers to share profit on FX conversion rates.
3. Segment-specific value-added services
Partial payments for e-commerce marketplaces; bill splitting and digital tipping for T&E and; basket data analytics for fuel stations.
4. Technology that increases approval rates
Proactive compliance with regional regulations and global security standards; high availability as well as fail-safe architecture; and real-time transaction data feed to merchant portals and to the acquirer’s team.
5. Maximizing cost-efficiency for the acquirer
Embedded tools for IPS fee prediction and merchant profitability analysis; workflow configuration and automation: onboarding, anti-fraud, clearing and settlement, dynamic pricing, chargebacks, card account updater; and outsourcing non-critical processes to the vendor with dedicated SaaS.
6. Securing new revenue streams by launching BNPL, SME card issuing, and other VAS on the same platform in record time.
Here’s what you need to know about Way4
Unlike many other acquirers, OpenWay’s clients are not burdened by rigid and uncoordinated legacy systems. In the rough waters of cross-border merchant acquiring, OpenWay has created Way4 which is a unified payment processing engine.
It is used to coordinate multiple channels, payment methods, currencies, and interfaces to international and local payment schemes in real time.
Way4 is able apply rules specific to region, vertical and merchant to each transaction in real time. These options cover online authorisation, dynamic pricing, anti-fraud, KYC, and many other workflows.
An advanced payment processing engine should be capable of analysing all types of data, both real-time and historical. This is the key to applying optimal scenarios on the fly and delivering targeted value-added services to merchants at the right time.
For example, while processing cross-border fleet payments, acquirers using Way4 can differentiate between fuel and snack purchases, and activate specific rules that make sure drivers stay within the purchase limits of their employers.
Read OpenWay’s case study to gain valuable insights on launching a successful cross-border merchant acquiring solution from scratch or enhancing your competitive advantages for the existing merchant portfolio, helping you set the stage for exponential growth.