8 cost components acquirers can optimize for a competitive edge

When you analyze the profit and loss of your infrastructure, are you confident you're getting the best value from your investment in technology? Is it robust and flexible enough to help you address challenges like rapid payments evolution, new merchant expectations, and changing regulatory requirements? And does it support your objectives for increasing profitability, growing your business, and attracting and retaining customers?

We’ve gathered some insights from working with acquirers around the world and mapped out eight categories of infrastructure-related costs that you should consider reviewing.

1. Transaction processing costs depend on volume-related factors such as authorizations, disputes, chargebacks, and fraud losses; as well as other costs like POS deployment and interchange/scheme fees. You'll want to compare your transaction processing costs with industry standards, identify merchant categories that are prone to higher chargeback volumes, and review your settlement performance.
2. Compliance and regulation costs are influenced by the complexity and frequency of regulatory changes, your geographical coverage, and the size of your compliance support team. You'll need to assess the current level of effort you expend on compliance and understand whether it limits your ability to focus on value-adding activities.
3. Capability development costs typically include development tools, testing environments, market research, and maintenance of operational capacity. You should assess whether you have enough in-house resources to develop and launch new products in a timely way to help you sustain competitive advantage.
4. Third-party integration costs are affected by the number and cost of third-party integrations and the level of change crossing supplier boundaries. You should assess the performance of your current third parties, including their SLAs, as well as the technical complexity of integration and ongoing maintenance and management.
5. Testing and certification costs are driven by the complexity and frequency of changes and the size of the team needed to perform testing and maintain test environments. You should review the technology and personnel costs involved as well as the strength of your current testing and certification framework.
6. Operating expenses are influenced by factors like service monitoring solutions, infrastructure upgrades, audits and reporting, and disaster recovery provisions. You'll need to consider the size of the in-house teams needed to support your current solutions, the age of the infrastructure, and whether operating expenses are included in the price per transaction.
7. Client support costs depend on aspects such as the number of merchants supported, the frequency of merchant implementations, ongoing product support, and data provision. You'll want to look at things like the time and costs to onboard new merchants and the people and technology costs associated with merchant support.
8. Maintenance costs are driven by elements like the number of merchants, transaction costs, quality assurance processes, and reporting capabilities. You'll need to assess the size of your support team compared with the number of merchants, the satisfaction metrics you're seeing for existing products, and your strategy for supporting new products.
    

To address the commercial and operational challenges of running a profitable acquiring business, many players turn to outsourcing providers. The benefits of outsourcing include:

• Cost predictability, enabling more accurate budgeting and cost control
• Access to innovative products with less need for in-house R&D resources
• Strengthened compliance with regulatory and scheme obligations
• The ability to onboard new merchants without increasing processing capacity
• Robust incident management and disaster recovery functions that can reduce risk and improve resilience
• Reduced need for technology and operational resources, releasing in-house teams for more strategic priorities
• Broad market coverage that can extend your reach to new geographies and segments
   

Visa Acceptance Solutions can help you outsource with confidence. Through a single connection to our modular, open platform, we offer access to products and services that can address your challenges at each stage of the lifecycle, from onboarding merchants through modernizing back-office operations.

Request a consultation with our payment experts to learn how you can get more value from your payments infrastructure. We'll provide you with cost optimization insights personalized to your business, plus a copy of our latest guide to help you master profit and loss.