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Merchants face a crucial decision when navigating cross-border payments: choosing between the Local acquiring model in cross-border payment solutions and cross-border acquiring. Understanding these models shapes success in international payments.

• Local acquiring reduces costs by saving up to 1% per transaction, boosts approval rates by 5-15%, and enhances customer experience with local currency and faster settlements.

• Cross-border acquiring offers global reach but often brings higher fees and approval challenges.
  Making the right choice impacts profitability, compliance, and customer trust in every international market.

Key Takeaways

• Local acquiring lowers costs and boosts payment approval by processing transactions through banks in the customer's country.

• Cross-border acquiring offers wider market access but often comes with higher fees and slower settlements.

• Choosing local acquiring improves compliance and customer trust by following local rules and offering familiar payment methods.

• Cross-border acquiring suits merchants entering new markets quickly or handling low transaction volumes without local setups.

• Many merchants combine both models to balance cost, approval rates, and global reach for better payment performance.

Overview

Local acquiring model in cross-border payment solutions

The local acquiring model in cross-border payment solutions allows merchants to process payments through banks or financial institutions within the same country as the customer. This approach gives merchants a strategic advantage in cross-border payments. Local acquiring increases payment approval rates and reduces transaction costs. Merchants benefit from faster settlements and lower interchange fees. The local acquiring model in cross-border payment solutions also helps merchants meet local regulatory requirements with ease.

Statistical data highlights the effectiveness of the local acquiring model in cross-border payment solutions. Merchants using multiple acquirers, including local acquiring, see acceptance rates up to 16% higher than those relying on a single acquirer. This improvement results from higher bank approval rates, reduced interchange costs, and better risk management. Local acquiring also supports payment in local currencies, which builds trust and improves the customer experience. Local acquirers play a key role in optimizing payment performance for merchants operating in cross-border payments.

Cross-border acquiring

Cross-border acquiring enables merchants to accept payments from customers in different countries by using acquiring banks outside the merchant’s home country. This method expands the merchant’s reach in cross-border payments and supports multiple currencies. Cross-border acquiring provides access to a global customer base and advanced fraud prevention tools. Merchants can process payments from various regions without setting up local entities.

The performance of cross-border acquiring can be measured using several key indicators:

Cross-border acquiring supports merchants who want to scale quickly in cross-border payments. This model allows merchants to manage payments efficiently across borders, even in markets where local acquiring is not available. Cross border acquiring remains essential for merchants seeking flexibility and broad market access in global acquiring.

Costs

Local acquiring

Local acquiring offers merchants a cost-effective approach to handling international transactions. By processing payments through an acquiring bank within the same country as the customer, merchants avoid many of the extra fees associated with cross-border acquiring. This model reduces transaction fees, eliminates intermediary bank charges, and minimizes currency conversion losses.

• Merchants using local acquiring often benefit from lower per-transaction costs. For example:

  • Local clearing networks, such as SEPA in Europe or Pix in Brazil, help merchants avoid intermediary bank fees, which can range from $15 to $35 per transaction.

  • Local acquiring allows buyers to pay in their own currency. This practice helps merchants lock in favorable exchange rates and avoid double conversion losses, which can reach 2-3% in cross-border acquiring scenarios.

  • Settlement times improve with local acquiring. Merchants receive funds faster, which enhances cash flow and reduces the risk of payment delays.

Note: Activity-based costing studies show that accepting cash can cost up to 9.1% of business revenue, with significant expenses tied to handling and processing. Debit acceptance costs may exceed cash costs depending on transaction size and merchant type. Local acquiring helps merchants manage these costs by streamlining payment acceptance and reducing operational overhead.

Local acquiring also simplifies compliance with local regulations, which can further reduce hidden costs related to legal and administrative requirements. Merchants operating in markets with strong local acquiring infrastructure often see improved profitability and more predictable payment expenses.

Cross-border acquiring

Cross-border acquiring enables merchants to accept payments from customers in multiple countries without establishing a local presence. This model supports global expansion but introduces additional costs that can impact the bottom line.

• Cross-border acquiring typically involves higher transaction fees. Merchants face charges for currency conversion, international card processing, and intermediary banks.

• Currency conversion costs can accumulate quickly. In many cases, payments require two conversions, such as "local currency → USD → merchant’s home currency," resulting in exchange losses of 2-3% per transaction.

• Settlement times are often longer with cross-border acquiring. Intermediary banks and international payment networks can delay fund transfers, sometimes extending settlement periods from one day to several days.

The global nature of cross-border acquiring also means merchants must navigate complex fee structures. For example, international transactions may incur SWIFT fees, additional processing charges, and compliance costs. These expenses can erode profit margins, especially for merchants with high transaction volumes.

The growing importance of cross-border acquiring reflects the rise in international transactions and global commerce. In 1999, the value of completed cross-border mergers and acquisitions reached $720 billion, or 8% of world GDP. This trend highlights the need for merchants to understand and manage the costs associated with cross-border acquiring. Trade costs, such as tariffs and payment processing fees, influence a merchant’s decision to expand internationally and select the most suitable acquiring strategy.

Tip: Merchants should analyze their payment flows and transaction sizes before choosing between local acquiring and cross-border acquiring. For high-volume markets, local acquiring often delivers better cost efficiency. For rapid market entry or low-volume international transactions, cross-border acquiring may offer greater flexibility despite higher fees.

Approval Rates

Local acquiring

Local acquiring stands out as a powerful strategy for merchants who want to optimize success rates in international payment processing. When a merchant uses local acquiring, the payment request appears as a domestic transaction to the issuing bank. This alignment with local banking standards and regulatory expectations leads to higher approval rates and fewer declines.

Payment networks and banks often flag cross-border transactions as higher risk, which can result in unnecessary declines. Local acquiring reduces this risk by ensuring that payment requests follow familiar formats and originate from trusted, locally licensed entities. For example, platforms such as Payermax have demonstrated that processing payments through local acquiring entities in Europe can increase approval rates by up to 21% compared to cross-border acquiring. French consumers, when paying through a local acquiring bank, experience fewer interruptions and a smoother checkout process.

Merchants benefit from local acquiring by offering payment in the customer’s local currency and supporting preferred local payment methods. This approach not only increases the likelihood of payment approval but also builds trust with customers. Local acquiring also helps merchants avoid fraud risk markers that often trigger declines in cross-border scenarios. By matching payment flows to local habits and regulatory requirements, merchants can significantly improve their payment performance and customer satisfaction.

Note: Local acquiring enables merchants to process payments with higher reliability, especially in markets where local payment preferences dominate. This model supports merchants in building a strong reputation for seamless and secure transactions.

Cross-border acquiring

Cross-border acquiring provides merchants with the flexibility to accept payments from customers in multiple countries without establishing a local presence. However, this model faces unique challenges in maintaining high approval rates. Payment requests processed through cross-border acquiring often appear as foreign transactions to issuing banks. This unfamiliarity can lead to increased scrutiny, higher perceived fraud risk, and more frequent declines.

Several comparative metrics help demonstrate the approval rate performance of cross-border acquiring in international markets:

• Market share growth in key regions reflects the ability of cross-border acquiring to gain acceptance and process payments efficiently.

• Cost of customer acquisition in new markets indicates how effectively a merchant can expand and retain customers through cross-border acquiring.

• Expansion of partner networks and collaboration rates show operational integration and the strength of acquiring relationships.

• Brand recognition and reputation serve as indirect indicators of customer trust and payment approval consistency.

• Revenue growth from new international markets highlights financial success and the effectiveness of payment processing strategies.

• Customer satisfaction and feedback scores provide direct insight into the quality of the payment experience and approval rates.

• On-time delivery rates and compliance with international trade regulations reflect operational efficiency and the ability to process payments without delays.

• Logistics and shipping cost efficiency can indicate how well cross-border acquiring supports the overall transaction process.

• Return on investment (ROI) for international expansion quantifies the financial returns merchants achieve through cross-border acquiring.

Empirical studies show that cross-border acquiring can deliver superior shareholder returns, especially in mature markets. Ownership characteristics, such as CEO international experience and foreign institutional investor involvement, also influence the success of cross-border acquiring strategies. Merchants often use cross-border acquiring to enter new markets quickly and access resource advantages, but they must balance these benefits against the risk of lower payment approval rates.

Tip: Merchants should monitor approval rates closely when using cross-border acquiring. Regular analysis of payment data and customer feedback can help identify issues and guide improvements in payment processing strategies.

Compliance

Local acquiring

Local acquiring provides merchants with a clear path to regulatory compliance in each market. Merchants must follow local licensing rules and adapt to anti-money laundering (AML) procedures set by local authorities. Many countries require payment service providers to hold specific licenses before they can process transactions. These licenses ensure that acquiring activities meet national standards for security and transparency.

Banks and payment institutions often decentralize compliance tasks. Local branches handle Know Your Customer (KYC), due diligence, and alarm processing. Branch managers collect and update customer information based on risk levels. They also monitor operational risks, such as data entry errors or identification lapses, using control reports. This structure allows for quick adaptation to new regulations and supports strong local accountability.

Merchants benefit from local acquiring by reducing the risk of fund freezes. Local licensing and compliance with AML policies help prevent regulatory issues that can disrupt business operations. In emerging markets, authorities may freeze funds if merchants lack proper documentation or licenses.

A decentralized approach to compliance also helps merchants manage data privacy and security. Local acquiring supports the collection of required documents and links each transaction to its source, reducing the risk of license breaches or privacy violations.

Cross-border acquiring

Cross-border acquiring introduces greater complexity in compliance. Merchants must navigate a patchwork of regulations across multiple jurisdictions. Each country may have different rules for data privacy, cybersecurity, and AML. Financial institutions face challenges in tracking and managing compliance for every transaction.

• Regulatory frameworks change rapidly, especially after geopolitical events or new sanctions.

• Data privacy laws, such as GDPR, restrict the movement of personal information across borders.

• Multiple intermediaries, each with their own compliance checks, increase the risk of delays or fund freezes.

If any party in the payment chain flags a transaction, the process can stall. Sanctions screening must occur in real time against global watchlists. Local banking practices and documentation standards add further complexity. Merchants risk fines, penalties, or reputational damage if they fail to comply with all relevant regulations.

Merchants using cross-border acquiring should invest in robust compliance risk management and continuous monitoring of regulatory changes. Leveraging technology, such as AI and blockchain, can help improve transaction monitoring and reduce operational risk.

Customer Experience

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Local acquiring

Local acquiring delivers a tailored customer experience by aligning payment processes with local payment methods and consumer expectations. Merchants who adopt local acquiring can offer familiar options such as mobile wallets, carrier billing, and region-specific cards. In South Korea, for example, most consumers prefer local payment methods like Kakao Pay and Samsung Card. African markets show a strong preference for mobile money and local payment methods, which build trust and encourage repeat purchases.

• Professional associations in France and South Africa work with telecom operators to create secure mobile payment ecosystems.

• Local payment methods often include payment via mobile number, SMS confirmations, and clear monthly invoices, which improve transparency and satisfaction.

• Regulatory authorities and service providers collaborate to adapt payment solutions to local habits, increasing user confidence.

Offering local payment methods in local currency simplifies the checkout experience and reduces confusion. Merchants who clearly name services on invoices and provide accessible customer support see higher satisfaction rates. These practices address regional differences in billing and support, ensuring that the checkout experience feels seamless and trustworthy.

Cross-border acquiring

Cross-border acquiring supports global reach but introduces challenges for customer experience. Customers often encounter unfamiliar payment interfaces, higher fees, and more declined transactions. Market research shows that cross-border payments feel riskier to consumers, which can lead to hesitation at checkout. A survey of Chinese online shoppers highlights that delivery quality, return logistics, and price fairness play a larger role in cross-border e-commerce satisfaction than in domestic models.

Merchants who optimize cross-border payments by offering a wide variety of local payment methods can increase conversion rates by up to 25%. In Latin America, for instance, many consumers rely on cash-based local payment methods like OXXO in Mexico. Providing these options at checkout improves the overall customer experience and builds trust. However, differences in delivery information and post-purchase support can still impact satisfaction.

Merchants should prioritize local payment methods and transparent communication to enhance the checkout experience in cross-border payments. Adapting to regional preferences remains essential for building long-term customer loyalty.

Market Scenarios

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Mature markets

Mature markets such as Europe and the United States display a strong preference for local acquiring. Merchants in these regions rely on local acquirers to process transactions efficiently and meet high consumer expectations. Local payment methods like credit cards and digital wallets dominate the landscape. Payment networks such as Visa and Mastercard require local clearing to maintain low rejection rates. Merchants benefit from established infrastructure, predictable regulations, and high card penetration. Cross-border payments in these markets often involve minimal friction due to robust compliance frameworks and advanced fraud prevention tools.

Despite the dominance of local acquiring, exceptions exist. PayPal remains popular for small transactions, offering convenience and buyer protection. Some consumers still use cash-based payments, especially for in-person purchases or specific demographics. However, digital adoption continues to rise, reducing reliance on cash.

Emerging markets

Emerging markets in Southeast Asia, Africa, and Latin America present unique challenges and opportunities for cross-border payments. Merchants must prioritize localization to succeed. Local payment methods such as mobile wallets, cash vouchers, and bank transfers are essential. For example, Mexican buyers prefer peso transactions, but settlements often occur in USD through offshore accounts. Partnerships like BBVA Bancomer and Sunrate enable local peso settlements, simplifying payments and building trust.

Payment service providers play a critical role by integrating local payment methods and ensuring compliance with local regulations. Local currency support eliminates conversion fees and increases conversion rates. Merchants must adapt to evolving consumer behaviors and regulatory environments. Companies like PayerMax obtain local licenses and build teams with deep market expertise to navigate complex landscapes. These efforts enable secure, efficient cross-border payments tailored to local preferences.

Merchants who invest in local payment methods and adapt to regional preferences can unlock significant growth in emerging markets.

Decision Framework

When to choose local acquiring

A merchant should consider local acquiring when aiming to optimize approval rates, reduce costs, and enhance customer trust in international transactions. Local acquiring works best in markets with strong regulatory frameworks and established payment infrastructures. Merchants benefit from faster settlements and lower cross-border fees. Local acquiring also supports compliance with local regulations, which reduces the risk of fund freezes. Industries such as ecommerce, SaaS, and online gaming often see higher success rates with local acquiring due to frequent international transactions and the need for seamless customer experiences.

Local acquiring improves authorization rates by leveraging local market knowledge and established relationships between issuers and acquirers. Merchants gain better control over cash flow and can offer payments in native currencies, which reduces friction and chargebacks.

A merchant with the resources to manage multiple local relationships and adapt to country-specific requirements will find local acquiring especially effective. This approach suits those who prioritize long-term growth and want to build a strong presence in specific markets.

When to choose cross-border acquiring

Cross-border acquiring becomes the preferred option for merchants seeking rapid entry into new markets or managing international payments across multiple countries without establishing local entities. This model allows a merchant to process international transactions efficiently, even in regions with complex regulatory environments or limited local infrastructure.

A merchant may choose cross-border acquiring when facing high entry costs or when testing new markets with lower transaction volumes. Firms with strong operational capacity, such as abundant resources or government support, can leverage cross-border acquiring for strategic asset acquisition and global expansion. Companies like Vale and Ambev have demonstrated success by using their resources and experience to manage risks and enhance performance abroad.

Merchants should evaluate their business goals, operational capacity, and risk tolerance before selecting an acquiring strategy. Institutional strength, regulatory environments, and resource availability all play critical roles in this decision.

Payment Partners

Selecting providers

Selecting the right payment partner plays a critical role in the success of any acquiring strategy. Merchants should evaluate providers based on several key criteria:

• Payment processing fees: Providers may charge different rates for transactions, monthly maintenance, and compliance. PCI compliance fees typically range from $79 to $125 annually, while non-compliance fees can reach $125 per month. Some companies, such as Stripe and PayPal, do not charge PCI compliance fees, which can reduce overall costs.

• Security measures: Leading providers implement advanced security measures, including point-to-point encryption and tokenization, to protect cardholder data. PCI DSS Level 1 certification remains essential, verified through annual audits and up-to-date compliance reports.

• Customer support: Reliable vendors offer 24/7 support, dedicated account managers, and assistance with compliance tasks like the Self-Assessment Questionnaire. Transparent pricing and clear contract terms help merchants avoid hidden charges and penalties.

• Payment gateway robustness: A strong payment gateway ensures secure data transmission and seamless integration with existing systems.

Merchants benefit from working with partners who provide compliance guidance, transparent cost structures, and robust security measures. PaymentCloud and other industry leaders recommend reviewing contract terms, support quality, and technology features before making a decision.

Multi-currency support

Multi-currency support has become essential for merchants operating in cross-border acquiring. Harmonized regulatory regimes, such as SEPA in the EU, and standardized contractual terms from networks like Visa and Mastercard, enable smoother cross-border payment operations. Closed-loop payment schemes from fintech companies, including PayPal and Alipay, demonstrate how integrated solutions facilitate multi-currency transactions efficiently.

• Standardized technical and financial frameworks, such as ISO standards, support interoperability and settlement speed.

• Cooperative associations like SWIFT help align payment system regulations, making multi-currency support more accessible.

A payment partner with strong multi-currency support allows merchants to accept and settle payments in various currencies, reducing conversion costs and improving customer satisfaction. This capability ensures that merchants can adapt quickly to changing market demands and regulatory requirements.

Local acquiring and cross-border acquiring each shape international payment strategies in distinct ways. Local acquiring offers lower costs, higher approval rates, and compliance advantages, while cross-border acquiring provides broader reach and flexibility. Merchants should review their business needs, market focus, and operational resources before selecting a model. The following table highlights key performance indicators that confirm practical impacts across markets:

Merchants can take advantage of emerging trends to guide their next steps:

• Real-time payments and AI-driven security are transforming transaction speed and safety.

• Omnichannel integration, biometric authentication, and cloud-based platforms support seamless, scalable solutions.

• Adoption of ISO 20022 and SWIFT gpi increases transparency and efficiency.

The optimal acquiring strategy depends on a merchant’s goals, resources, and target markets. Careful evaluation and piloting both models with trusted payment partners can help drive long-term success.

FAQ

What is the main difference between local acquiring and cross-border acquiring?

Local acquiring processes payments through banks in the customer’s country, while cross-border acquiring uses banks outside the customer’s country. Local acquiring usually offers lower fees and higher approval rates. Cross-border acquiring provides broader market access.

How does local acquiring impact payment approval rates?

Local acquiring increases approval rates. Issuing banks recognize transactions as domestic, which reduces declines. Merchants see fewer interruptions and higher payment success, especially in markets with strong local payment preferences.

Are there compliance risks with cross-border acquiring?

Yes. Cross-border acquiring requires merchants to follow multiple regulatory frameworks. Each country may have different rules. Merchants must monitor compliance closely to avoid fund freezes or penalties.

Which model offers faster settlement times?

Local acquiring typically provides faster settlements. Merchants receive funds quickly because transactions clear through local networks. Cross-border acquiring may involve delays due to intermediary banks and international processing.

Can merchants use both models at the same time?

Yes. Many merchants combine local and cross-border acquiring. This hybrid approach helps optimize costs, approval rates, and market reach. Merchants can tailor payment strategies to each region’s needs.