In today’s digital retail environment, merchants expect — and demand — seamless, feature-rich shopping experiences across all channels and devices.
For smaller payment acquirers, however, delivering on these expectations presents a significant challenge.
Large, established providers with deep resources have long dominated this space, leaving their smaller rivals struggling to compete.
Yet recent shifts in technology strategy suggest a path forward that could redefine the playing field.
The Confidence Gap
According to Bridging the Gap – Helping acquirers meet evolving merchant demands, the confidence gap between small and large acquirers is stark.
Just 10% of acquirers processing less than $1 billion annually feel highly confident in their ability to meet merchant demands for unified shopping, compared to a commanding 74% among those processing over $100 billion.
Unsurprisingly, many merchants continue to gravitate toward well-known providers capable of building complex payment ecosystems in-house.
On average, smaller acquirers offer six fewer key digital features than their larger counterparts.
This shortfall encompasses crucial elements like fraud prevention tools, real-time payment acceptance, and loyalty programme integrations — all of which are fundamental to maintaining merchant satisfaction in a multichannel world.
A Significant Transformation
Nonetheless, the outlook is not uniformly bleak.
The payments industry is undergoing a significant transformation driven by the rise of third-party, modular solutions.
These innovations are reshaping traditional assumptions around technology ownership, offering small and mid-sized acquirers a compelling opportunity to compete at scale without the financial or operational burden of building bespoke systems.
Approximately 74% of acquirers now use third-party payments solutions.
For smaller acquirers, in particular, outsourcing offers immediate access to proven, continuously upgraded technologies at lower upfront cost.
Beyond simple economics, third-party providers bring expertise in crucial areas such as fraud prevention — where the threat landscape continues to evolve rapidly, propelled by AI-enabled fraudsters and increasing cyberattacks.
This shift towards modularity is more than a tactical response; it represents a strategic rethinking of what it means to deliver value as an acquirer.
By leveraging APIs, cloud-based fraud systems, and partner marketplaces, smaller providers can quickly integrate cutting-edge features that once would have taken years and millions to build internally.
Moreover, acquirers using third-party solutions report greater agility in responding to regulatory shifts, customer demands, and the increasingly important metric of uptime reliability.
Indeed, uptime has emerged as a powerful differentiator.
While merchants once tolerated minimal service interruptions, today’s high expectations demand near-perpetual availability.
Research indicates that acquirers whose platforms achieve at least 99.99% uptime are far less likely to lose merchant clients or seek new technology partners.
In a competitive environment where customer loyalty is fickle and operational disruptions are costly, ensuring high system availability is no longer a bonus — it is business-critical.
Beyond Technology
Beyond technology, smaller acquirers are also rethinking their commercial strategies.
Historically, many sought growth by onboarding higher-risk merchants, a practice that, while offering lucrative short-term gains, exposed them to disproportionate fraud risks.
Today, however, more acquirers are recognising that robust fraud management — enabled via behavioural analytics, biometrics, and real-time monitoring — must be foundational rather than optional.
Critically, there is no one-size-fits-all answer to the “build vs. buy” question.
Some acquirers, particularly those with abundant resources, still prefer full in-house development to maximise control and customisation.
Yet for the majority, embracing external partnerships offers a pragmatic path to differentiation, resilience, and growth.
What is clear is that acquirers of all sizes must evolve to meet merchants’ rising expectations.
Complexity, speed, security, and seamlessness are no longer premium features — they are basic requirements.
By intelligently adopting modular third-party solutions and focusing on rapid onboarding, high uptime, and superior fraud prevention, smaller acquirers can not only survive but thrive in the next phase of digital commerce.
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