How to Choose an Acquiring Partner for a Small Business: Best Practices
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Small businesses took the hardest blow during the pandemic because of global lockdowns. Many had to close down, go bankrupt, but those who managed to stay afloat, had to adapt as fast as possible. On the one hand, adapting to changes for a small business is easier than for big corporations, because they are much more flexible and their processes are quicker. But on the other hand, big corporations have the resources and are usually well backed to weather lengthy hard times. That is why, when embracing changes, for a small business time and money is of the essence.

One of the greatest challenges small ventures had to face during the pandemic is going online. Many of them relied on personal contacts and word of mouth marketing and this change required not just paying to get an online shop installed and staff taught, but also new distribution channels and ways to handle payments other than cash or good old on-site credit card acquiring. It is vital for a small business to save as much time and money on transitioning as possible. But enrollment as a merchant with an online acquirer is usually not a quick matter and sometimes costly, to say nothing of fees you'd have to pay for each transaction. Small businesses are often small enough that that alone could be a very sensitive issue and could affect pricing. Obviously the main and most important factor when choosing an online acquirer for a small business is the time and money combination.

The first option many small businesses consider is giants like PayPal. Yes, enrollment is pretty quick. As Europe, North America and many Asian countries are mature, sophisticated markets with sizable and attractive economics, many users there have their Paypal accounts. But Paypal has serious drawbacks as a PSP partner. Its cashout fees are impressive, so is the fraud rate. It is also very easy to reverse a PayPal payment and PayPal literally has nothing in terms of analysis and accounting tools. And, captain obvious, users have to have accounts to use it. More than that, PayPal is a PSP that mostly does transfers between individuals, it is not bank acquiring per se. While it's feasible for an Etsy shop or Instagram accounts that act as shops, if you are planning to have a proper online shop where people can use their credit cards and feel safe for it, you will need a proper acquiring service.

What about using your bank acquiring services? Possible, yes. But as compared to the fees from smaller companies for whom online acquiring is the main business, banks charge a lot of extra. The reason is, online acquiring is very far from being regular banks' main milking cow, and yet, its infrastructure requires maintenance that needs investment and people to take care of it. So, for many banks online acquiring is merely a way to show that they have a wide range of services. They won't make much on it, because many smaller customers cannot afford it, but they need it to show variety. So, the second big factor when choosing an acquiring partner, look into smaller companies for whom online acquiring is the main business for more comfortable fees. Look into Stripe, Sage Pay or Connectum, if you're based in the EU or UK, compare their prices and services list.

What other factors do you need to consider when choosing an acquiring company? If you are looking into the US, EU or UK being your main markets, you need to bear in mind that in 2021 all major card issuers are transitioning to the new safety standard called 3D-secure 2.0 or 3DS2. This standard requires all card payments to undergo at least two stages of authentication, so, your customers won't be able to make a payment with just their card credentials. They will need to enter a password, a PIN code sent to their cell phone, present a fingerprint or go through a face recognition procedure. If you don't want your payments rejected en masse, make sure your acquiring partner services are compatible with 3DS2. Most big online payment gateways, such as Amazon, WeChat or Alipay, are already compatible, but we've already covered that big players have bigger fees. Good news however is that some smaller acquiring companies, like Connectum, for instance, also provide 3DS2- compatible services.

And last but not list, carefully study the security measures your prospective acquiring partner offers. Make sure they have licenses in the countries where you plan to sell, that they are authorized by the major credit card issues whose cards you want to accept. Check out their anti-fraud measures and what they offer in terms of hidden payments and untransparent commissions. Luckily, with the onslaught of massive digitalization, you will have a wide range of service providers to choose from.

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