Amid Many Changes, Acquirers Retain Their Importance Among Card Brands

Though the big news about Discover Financial Services is its pending acquisition by Capital One Financial Corp., the acquiring segment remains vital to the card brand.

“Our business model, being a network rail, is the right space for us,” Judith McGuire, Discover senior vice president of global products, told Digital Transactions News at Transact 2024, the Electronic Transactions Association’s annual conference last week in Las Vegas. Speaking for the network side of Discover, McGuire says it “would rather partner than compete against others in the ecosystem.”

Several years ago, Discover changed its acquiring model from only direct relationships with merchants to enabling its merchants to have consolidated processing with acquirers. That move has paid off, she says. “We still have our relationship-management organization that supports acquiring.” That group helps Discover ensure it understands how it can support [merchants’] businesses, McGuire says.

Card brand Visa Inc., too, heavily relies on acquirers to broaden and boost payment card acceptance. Last week, Visa updated its Visa Acceptance Platform, which now includes an artificial-intelligence tool to help software developers and ease improvements to Authorize.net, a gateway Visa has owned since 2010.

In particular, a major piece of the changes to Authorize.net is that it’s built on top of the Visa Acceptance Platform, Andre Machicao, Visa senior vice president of acceptance solutions, told Digital Transactions News. That affords the gateway additional flexibility to suit how a merchant wants to use it, he says.

In a concept called composable commerce, merchants can pick and choose the services they need so their payment options are tuned to their customers. “The feedback from merchants is they want to be paid by however the consumer wants to pay,” Machicao says. That can be important when a software developer wants to build a business-management app with payments acceptance for merchants with unique needs, such as recurring payments or e-commerce shopping.

Composable commerce is part of that trend and can help make more services available to merchants that otherwise might not have been large enough to use some of them. While one could suggest Visa is commoditizing these services, Machicao prefers to view it from a lifting-all-boats perspective “by making it available on an open platform basis, it’s a choice…We’ve kind of unbundled these services and made them more accessible.”