How Merchant Acquiring Helps E-Commerce Businesses Stay Ahead?

Merchant acquiring is reshaping the way we shop on e-commerce platforms across the globe. In this blog post, we’ll explore how merchant acquiring drives this transformation by first identifying the top four payment methods used in e-commerce, examining how it’s becoming the backbone of online payments, and providing guidance on choosing the right merchant acquirer for your business.

What Are The Top 4 E-Commerce Payment Methods?

As an e-commerce merchant, providing diverse payment options is more than a convenience—it's a necessity for staying competitive and increasing conversions.

Today’s customers expect seamless, secure, and flexible payment methods. Here are the top four e-commerce payment methods you should integrate into your platform to meet these demands and drive global sales.

1. Digital Wallets: The Shopper’s Favorite

Digital wallets, including Google Pay, Apple Pay, and PayPal, dominate the e-commerce space. These payment solutions accounted for nearly 50% of global e-commerce transactions in 2023.

Why Digital Wallets Are Popular:

• Speed and Convenience: Payments are completed in seconds, often with a single tap.
• Enhanced Security: Tokenization safeguards sensitive customer data.
• Global Acceptance: Widely used across borders, making them ideal for international e-commerce.

Offering digital wallets ensures you’re catering to a broad audience that values quick and secure checkouts.

2. Credit and Debit Cards: The Trusted Option

Despite the rise of digital wallets, credit and debit cards remain essential, representing over 34% of e-commerce transactions in 2023.

Why Cards Are Still Relevant:

• Universal Accessibility: Nearly everyone has a credit or debit card.
• Reward Programs: Customers often use credit cards to earn cashback, points, or travel miles.
• Familiarity: Cards are a trusted option, especially for those less comfortable with newer payment technologies.

Make sure to accept major card networks like Visa, Mastercard, and AMEX to cover all your bases.

3. Account-to-Account (A2A) Payments: Simplicity Redefined

A2A payments, also known as Pay-by-Bank, are growing rapidly, thanks to open banking initiatives. These payments accounted for 7% of global e-commerce transactions in 2023.

Key Benefits of A2A Payments:

• Cost Efficiency: Direct transfers eliminate intermediaries, reducing transaction fees.
• Secure Transactions: Payments are processed through trusted bank interfaces.
• Open Banking: Initiatives like PSD2 in Europe are driving adoption by offering real-time and transparent transactions.

This payment method appeals to tech-savvy shoppers looking for simple, secure payment options.

4. Buy Now, Pay Later (BNPL): Flexible and Growing

BNPL is transforming e-commerce, particularly among younger generations. It accounted for 5.1% of global transactions in 2023 and is growing in popularity.

Why BNPL Is a Game-Changer:

• Flexibility: Shoppers can split their payments into manageable installments.
• Increased Sales: BNPL often leads to higher order values and repeat purchases.
• Customer Appeal: Offering BNPL shows empathy for customers’ financial situations.

Partner with providers like Klarna, Afterpay, or Affirm to offer this modern payment option.

Why Merchant Acquiring Is the Backbone of E-Commerce Payments?

Smooth and secure payment processing is the lifeblood of any business. Behind the scenes, merchant acquiring serves as the silent engine that keeps transactions flowing seamlessly.

Whether you’re a startup or a global e-commerce giant, understanding merchant acquiring can transform your payment ecosystem and elevate your business success.

1. Enabling Hassle-Free Payment Acceptance

Without merchant acquiring, accepting online payments would be impossible. Acquirers act as the bridge between merchants and payment networks, enabling transactions through credit cards, digital wallets, and even emerging methods like Buy Now, Pay Later (BNPL).

Benefits of a Strong Acquirer:

• Payment Diversity: Offer multiple payment options to cater to customer preferences.
• Secure Transactions: Ensure compliance with industry standards like PCI DSS for customer data protection.
• Reduced Cart Abandonment: Reliable payment systems minimize failed transactions, keeping customers happy.

2. Boosting Customer Confidence

A smooth checkout process builds trust. Did you know that 70% of online shoppers abandon their cart after a failed transaction? Partnering with a dependable acquirer ensures higher transaction success rates, resulting in fewer abandoned carts and more satisfied customers.

Key Takeaways:

• Fewer Payment Failures: Secure systems ensure consistent transaction approvals.
• Frictionless Checkout: Fast, reliable payments improve the overall shopping experience.

3. Scaling E-Commerce Businesses Globally

Dreaming of expanding your e-commerce business worldwide? Merchant acquirers unlock global opportunities by supporting international payment methods, currencies, and cross-border transactions.

How Acquirers Enable Global Growth:

• Currency Conversion: Handle transactions in multiple currencies effortlessly.
• Localized Payments: Offer region-specific payment options for a personalized shopping experience.
• Regulatory Compliance: Navigate the complexities of cross-border payment regulations.

4. Leveraging Advanced Analytics and Insights

Modern acquirers don’t just process payments—they provide powerful tools for data-driven decisions. Real-time analytics and reporting features offer insights that help businesses optimize payment flows and customer experiences.

Must-Have Features:

• Success Rate Analysis: Monitor transaction approval rates to identify trends.
• Customer Behavior Insights: Understand how customers interact with your payment options.
• Chargeback and Refund Reports: Manage disputes effectively to maintain profitability.

What Happens After a Customer Clicks ‘Pay’?

Every online shopper has clicked ‘Pay’ at some point, but few understand the intricate process that unfolds behind the scenes. For e-commerce merchants, knowing what happens after this click is crucial to creating a seamless, secure payment experience. Let’s break down the journey from cart to checkout and beyond.

1. From Cart to Checkout: The Starting Point

The process begins when a customer adds items to their cart and proceeds to checkout. At this stage, ensuring a smooth and trustworthy interface is key to reducing cart abandonment.

Key Factors at Checkout:

• User-Friendly Design: A streamlined checkout keeps customers engaged.
• Trust Signals: Secure payment badges and SSL certifications build confidence.

2. Payment Information Entry: Customer Preferences Matter

Next, customers input their payment details—credit cards, digital wallets, or options like Buy Now, Pay Later (BNPL). Offering a variety of payment methods ensures you cater to diverse preferences, especially for global audiences.

Must-Have Payment Options:

• Credit/Debit Cards: Widely trusted and universally accepted.
• Digital Wallets: Google Pay, Apple Pay, and PayPal for faster checkouts.
• BNPL: Flexible installment plans for increased cart value.

3. Authorization: Behind-the-Scenes Approval

Once payment details are entered, the payment gateway encrypts the data and sends it to the payment processor. The processor contacts the customer’s bank (or card issuer) to confirm if sufficient funds or credit are available.

What Happens Here?

• Encryption: Keeps sensitive data secure.
• Instant Response: Approval or decline signals are sent back in seconds.

4. Authentication: Building Trust Through Security

Security is paramount in e-commerce. Authentication measures, like 3D Secure or OTP verification, ensure the transaction is genuine while protecting against fraud.

How Authentication Works:

• Customer Verification: OTPs or biometric checks confirm the buyer’s identity.
• Frictionless Experience: Optimized authentication minimizes disruptions.

5. Payment Settlement: The Final Step

Once approved, the transaction moves to the settlement phase. Funds are transferred from the customer’s bank to the merchant’s account via the merchant acquirer. The timing varies depending on the payment method, ranging from instant settlements to a few business days.

Why Settlement Matters:

• Smooth Operations: Timely settlements improve cash flow.
• Transparent Statements: Clear reporting builds trust with merchants.

How To Decide Between Popular Merchant Service Providers?

Choosing the right merchant service provider (MSP) is crucial for e-commerce success. The right MSP ensures secure, seamless transactions, enhances customer trust, and empowers your business to scale. But with countless options available, how do you pick the best fit for your needs? Here's a friendly guide to help you make an informed decision.

1. Understand Your Business Needs

Start by assessing your business's specific requirements. Identifying what you need ensures you only evaluate MSPs that align with your goals.

Key Considerations:

• Buy Now, Pay Later (BNPL): Need flexible payment options? Look for providers supporting BNPL and cardless EMIs.
• Global Operations: If you sell internationally, prioritize MSPs that support multi-currency transactions.
• Recurring Payments: For subscription-based businesses, ensure the MSP offers tools for recurring billing.

By narrowing down your needs early, you can focus on MSPs that streamline your operations.

2. Prioritize Payment Security

Security is the foundation of any reliable MSP. Protecting your customers’ sensitive data builds trust and reduces fraud risks.

Must-Have Security Features:

• PCI-DSS Compliance: Ensures payment data is handled securely.
• Tokenization: Masks sensitive card information during transactions.
• Fraud Detection Tools: Identifies and blocks suspicious activities.
• Two-Factor Authentication (2FA): Adds an extra layer of security.

A secure MSP not only safeguards transactions but also enhances your brand's credibility.

3. Offer Diverse Payment Options

Today’s shoppers expect flexibility at checkout. Ensure your MSP supports multiple payment methods to reduce cart abandonment and boost conversions.

Essential Payment Methods:

• Digital Wallets: PayPal, Google Pay, Apple Pay.
• UPI & Net Banking: Widely preferred in regions like India.
• Credit/Debit Cards: Universal and trusted.
• Pay Later Options: BNPL and cardless EMIs for younger, budget-conscious buyers.

The more payment choices you offer, the better you cater to a global audience.

4. Check for Transparent Pricing

Hidden fees can hurt profitability, so look for MSPs with clear and upfront pricing structures.

Costs to Evaluate:

• Transaction Fees: Percentage or fixed fees for each sale.
• Integration Costs: Charges for integrating the MSP into your platform.
• Monthly Fees: Ongoing maintenance costs.
• Cross-Border Charges: Fees for international transactions.

Choose an MSP with competitive pricing that aligns with your revenue model.