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How Local Acquiring Stimulates Global Growth

By: Ted Rogers
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In the fast-expanding landscape of global ecommerce, many brands recognize the importance of localizing content, shopping experiences, and checkout processes. However, a crucial aspect of driving successful global payments is often overlooked: local acquiring.  

A surprising 83% of merchants lack direct access to a local acquirer in every market they operate in.1 As we’ll explore in this brief guide to local acquiring, this lack of access may be standing in the way of many brands’ pursuit of rapid global growth. 

What is Local Acquiring? 

Local acquiring refers to the process of managing online payments through financial institutions situated in the customer’s own country. This method is a key component in localizing the payment process, ensuring that transactions are processed in a familiar and regulatory-compliant manner. Local acquiring, as we’ll see, can help eliminate complexity, increase authorization rates, and lower potential costs. 

Local Acquiring vs. Cross-border Acquiring 

In contrast, a cross-border acquiring involves handling payments via banks located outside the customer’s country. This can often lead to additional costs and less familiarity with local payment preferences and regulations. 

For instance, consider a customer in Japan purchasing from a European online store.  

Under local acquiring, the customer hits the “Buy” button, and the brand’s Japan-based acquirer requests authorization of payment from the Japan-based bank. The local acquirer is familiar with typical bank requirements and processing norms. They format things correctly and send the request as the bank expects. The bank doesn’t bat an eye; it accepts the authorization request, the funds are released, and the sale proceeds without a hitch. 

However, with cross-border acquiring, a European acquirer would handle the transaction, and the Japanese bank may or may not be familiar with them. The local bank may not recognize data on the request form. They might have stringent fraud controls in place. At the end of the day, the payment might be authorized just as smoothly as when a local acquirer is involved. But—and it’s an important “but”—the fact of the matter is that the transaction is less likely to be authorized, driving lower authorization rates overall and some potentially unhappy customers. 

Why is Local Acquiring So Important? 

Local acquiring is not just a method of processing payments; it’s a strategic tool for global ecommerce success. In today’s world, where purchases made across international borders are becoming more and more commonplace, ensuring a seamless checkout process is more important than ever. Here’s what adding local acquiring capabilities can deliver for your business: 

Increased Authorization Rates 

Local acquirers have in-depth knowledge of their market’s unique payment landscape, including consumer behavior and regulatory requirements. This insider knowledge translates to higher authorization rates for transactions, as local acquirers can more accurately assess and approve legitimate purchases, reducing the likelihood of false declines. 

Lower Costs and Fewer Charges 

Utilizing local acquiring means transactions are less likely to incur cross-border fees and currency conversion charges. This cost efficiency not only benefits the merchant but also the consumer, who often faces additional costs when purchasing from international sites. 

Enhanced Customer Experience 

By processing payments locally, businesses can offer a more seamless checkout experience. That means, in addition to supporting local payment methods, displaying prices in local currency, and providing customer service in the local language, all of which contribute to a more personalized and reassuring shopping experience, they can also ensure that they eliminate failed ecommerce payments that harm revenue and retention.  

So, Why Don’t More Companies Use Local Acquiring? 

If local acquiring can deliver so many benefits, it raises an obvious question: why aren’t more businesses using it? 

The short answer: it’s tough to go it alone.  

The journey towards integrating local acquiring into a business’s payment strategy is fraught with challenges. Establishing a local legal entity in each market is necessary to access banking services directly and support local acquiring. This can be an expensive and complex process, entailing legal hurdles, understanding diverse regulatory landscapes, and setting up operational infrastructures. Furthermore, managing multiple relationships with local banks and navigating varying market conditions adds to the operational burden. And that’s just for one market, let alone many different ones. 

These factors collectively make supporting local acquiring a daunting task for many companies, especially those without significant resources or expertise in global market operations. 

Tap into an Expansive Acquiring Network and Drive Global Growth 

Fortunately, there is a solution available for brands to navigate the complexity of global ecommerce and support local acquiring in more markets: the right partner. 

Leveraging a global payments partner with significant presence, experience, and relationships can add up to greater authorization rates, fewer costs, and simpler global growth. 

With Digital River as your merchant of record, you not only gain access to a comprehensive online payments platform, you also gain access to our expansive network of entities across the globe, including: 

  • 12 local legal entities 
  • 26 local acquiring partners 
  • 40+ markets with local processing capabilities 

Our robust infrastructure drives a 10% average increase in payment authorizations while supporting the local payment options that shoppers prefer. Accelerate your global growth while Digital River navigates operational complexities and shields your business from risk. Contact us today and learn more about how Digital River can help you maximize ecommerce revenue today.