Why understanding the digital payment process is a new priority for companies – ensuring compliance and avoiding risks

By Dr. Samareh Khosravi, Managing Director Legal, Risk & Compliance at epay, a Euronet Company

Fraud and data security are becoming increasingly important, making the understanding of payment processing an entrepreneurial duty. Those who understand and strategically implement these processes not only minimize risks but also create growth opportunities. In this article, Dr. Samareh Khosravi explains why the right payment system is crucial to the success of a company and what business owners should know about #acquiring.

The Importance of Payment Processing

Payment processing is no longer just a technical detail; it is the backbone of any business interacting with customers online or offline. Smooth, secure, and customer-friendly payment processing is more than a convenience; it determines customer trust and business efficiency.

What is Acquiring and Why is it Relevant?

Acquiring is the process that enables merchants to accept credit card payments. This involves accepting card payments in your store, whether online or physical, through a card terminal. However, the reality behind this seemingly simple process is complex and highly regulated. The acquirer, with the required and according license, ensures that the transaction between the buyer, the card issuer, and the merchant runs smoothly. This function is the foundation of modern payment processing.

Acquiring is more than just a technical process; it is a central component of payment processing that ensures the financial security of merchants and consumers. Without an acquirer, companies would not be able to accept payments by credit card, which would be a significant disadvantage where cashless payment is preferred society. Additionally, the acquirer not only handles the payment processing but also assumes associated risks, such as payment defaults or fraud attempts.

Security: A Must in the Digital Age

Digitalization has undoubtedly revolutionized payment systems. However, with the increasing use of credit cards and digital payment methods, the risk of fraud and data misuse also rises. Entrepreneurs are therefore faced with the challenge of ensuring security while offering a smooth payment process.

Acquirers play a key role in fraud prevention, working closely with card systems like Visa or Mastercard to detect suspicious transactions and take appropriate measures. Security protocols, such as two-factor authentication or token-based encryption of card data, are essential measures to prevent fraudulent activities.

For entrepreneurs, this means a trustworthy acquirer not only processes transactions but also minimizes the risks associated with digital payments. Trust in the payment system is crucial for both customers and companies.

Risks and Challenges in Acquiring

Acquirers face many potential risks. Insufficient diversity of merchants or inadequate technical infrastructure can lead to significant losses. The prevention and management of fraud are also essential requirements.

Companies should therefore always keep an eye on their payment service providers and their risk management. Choosing and collaborating with a reliable acquirer who understands and professionally manages these risks is crucial for long-term success.

Technology: The Engine of Payment Processing

Modern acquirers like epay offer a variety of technical solutions to facilitate payment processing. These include payment terminals, online payment systems, a wide range of popular digital payment methods, and the integration of payment solutions into existing business models. An often-overlooked aspect is the international component of acquiring. Companies operating globally need a solution that works in different countries and accepts foreign currencies. This is where the technological infrastructure of acquirers plays a crucial role.

At #epay we are committed to making our payment options available worldwide, offering the necessary infrastructure with over 800,000 POS terminals at approximately 352,000 retail locations in 64 countries. Additionally, as the digital payment unit of the global payment network Euronet (NASDAQ:EEFT), we enable our customers to access its other innovative payment solutions and, in particular, to access the power of an additional 833,000 ATMs worldwide, a global money transfer network of 586,000 locations and products and services in over 200 countries and regions to securely manage financial flows worldwide. This is particularly relevant for companies expanding internationally or conducting business with foreign customers.

Compliance and Regulation: An Indispensable Part of Payment Processing

Entrepreneurs should ensure that their acquirer meets all legal requirements. The financial sector, especially in payments, is strictly regulated. In the EU, acquiring is subject to financial supervision by authorities such as BaFin (Federal Financial Supervisory Authority) in Germany. These regulations protect your business from fraudulent activities and ensure that all transactions are processed securely.

A reliable acquirer will not only meet technical requirements but also ensure compliance with all national and international laws and regulations. This includes compliance with anti-money laundering regulations and the GDPR (General Data Protection Regulation). In addition to a bank or financial institution license, acquirers must comply with extensive security measures, such as two-factor authentication and certifications from card schemes like Visa and Mastercard.

Acquirers must also regularly set up foreign currency accounts to handle international transactions. This ensures that payments can be processed efficiently and securely in various currencies.

The Complex Network Behind Every Credit Card Payment

Behind every credit card transaction lies a highly complex system based on sophisticated technologies, strict security standards, and the collaboration of issuers (the card issuer), acquirers, and payment networks. Only through the perfect interplay of these actors we can pay easily, securely, and conveniently by credit cards in our daily lives—without having to worry about what is happening in the background.

This article is based on the German-language guest article by Dr. Samareh Khosravi for Businesstalk am Kudamm .