Acquiring is predicted to grow
Newspaper IZVESTIYA №194 as of 16 October 2008
Nowadays the majority of banks offer acquiring to their business customers and entrepreneurs. This service is beneficial for all parties. The customer has the possibility to increase sales and the banks gain commissions. To begin this service the customer (retailer) signs an agreement with a bank and receives the POS terminal. More specifically they obtain the hardware and software used for checkouts – the equivalent of an electronic cash register. All transactions are made on-line. The bank receives a list of operations and posts them to the customer’s account.
The bank will install the POS terminal free of charge. Dmitry Gromyko, deputy head of the plastic cards department of Promsvyazbank says that this service requires the bank to invest in such items as the purchase of equipment, receiving licenses, and qualified personnel hiring. If the retailer has minimum transactions there will be little return on the investments. Furthermore, the bank-acquirer pays a considerable part of the commission to the issuer bank. Therefore we find that on one hand the bank wants to earn higher fees to cover the expenses on the other hand the bank cannot charge high fees in order to sell the product. Sometimes acquiring does not bring any income to the bank. This occurs when the bank can receive higher fees from other services used by this customer. Usually commissions for acquiring range between 1.5 and 2.5 percent of the payment.
Cardholders usually spend 10-15 percent more since they are not limited in the amount of liquid cash. They can easily make “unplanned” purchases. As a result, the retailer gains from acquiring. The retailer can also save on cash collection and minimize some risks. Most of the retailers understand all the advantages of acquiring and the service becomes more popular. Only those retailers selling their goods with a very low margin might there be an exception, thinks Viacheslav Andriushkin, Deputy Chief Executive of SDM-BANK.
Maria Zenina, GLOBEXBANK Department Director believes that the growth of plastic cards emission, both debit and credit cards, will result in acquiring turnover doubling.