Exact Timeline to Launch a Card Acquiring Business

Most fintech founders who ask "how long will this take?" are really asking a different question: "which model should we build?" The answer to the second question determines the answer to the first, and getting it wrong in the planning stage is one of the most reliable ways to spend three years and run out of runway before processing a single transaction.

Why Your Business Model Is the First Timeline Decision You'll Make

There are three ways to enter the card acquiring industry. Each comes with a different regulatory burden and time horizon to launch.

The first model is to become a technical service provider who runs on a referral basis under a licensed partner. The second is to form a company that will obtain a payment institution (PI) or an electronic money institution (EMI) license and will acquire merchants directly, but payments will go through a third-party acquiring provider. The third is to establish a company that will function as a full principal card acquirer who is a member of Visa or Mastercard and owns the technical systems themselves.

Your business model will dictate your launch date. By skipping this foundational element and choosing the full principal acquirer model from the start, many companies find themselves struggling to launch in the time frame they had considered sufficient for launching. Some of these companies are still in the midst of the building process today, years after they originally attempted to start operations.

Typical End-to-End Timeframes by Acquiring Model

The length of time it takes to build and launch a card acquiring company varies by model by as much as 18 months. In the table below, each entry point for acquiring companies includes the time it may take before the first live transaction passes through the acquiring company’s system.

Technical Service Provider (No Acquiring License)

Technical service providers will operate on a referral basis under a licensed partner’s umbrella. Because the licensed company will handle all acquiring tasks, the technical service company’s tasks are limited. The time it may take to reach the live stage is 3 to 6 months. While this is an appealing model for startups just learning about the acquiring industry, the trade-off is that the company will not own the merchant relationships and acquiring margin. This is typically a staging area for newer companies to gain experience before building out an acquiring company that can compete in the market.

Payment Institution or EMI With Third-Party Processing

The payment institution and electronic money company has licenses and integrates with a payment gateway. However, the acquiring company does not need to become a member of Visa or Mastercard. Processing will occur through a third-party acquiring provider. The length of time it may take to reach the live stage is between 12 and 18 months. This model offers the advantage of having full ownership of the merchant relationships that are acquired. These merchants can be onboarded directly by the acquiring company, without needing to rebuild those relationships should the acquiring company later move into a full acquiring company model.

Full Principal Card Acquirer

A full principal card acquirer must receive a license, become a member of Visa or Mastercard, and build the technical systems. In most cases, it takes between 2 and 3 years to establish an acquirer in this way. The most experience payments professional with 23 years in the payments industry stated that it took his company three years to reach the first transaction after establishing the acquiring company. However, that was because they had a technical vision for the acquiring company from the very beginning of its founding. Any acquiring company without such a well-thought-out vision will take longer to establish itself as an official, operational acquiring company.

The Four High-Level Phases and How Long Each Takes

Regardless of the model for acquiring companies that you plan to establish, there are four phases the company will pass through in that order in the building process. The time frames noted below are estimates for acquiring companies that have sufficient resources to dedicate to the building process. Each phase has a floor and an estimated time for completion, but there is no ceiling to how long the process may take to complete in reality.

Phase 1: Strategy, Market Scoping, and Vendor Selection (2–4 months)

Before any individuals in your acquiring company can approach the regulators or the card schemes, you must establish your target market, the types of merchants you would like to work with, and your types of payment requirements. This phase will take between 2 and 4 months to complete. However, if the vendors are not appropriately selected at the outset, it is very likely that you will encounter delays in later stages of the acquiring company’s construction. This phase includes determining your payment processor, your payment gateway, your fraud software, and your settlement software. These companies will take some time to select, and it is stated by many acquiring company practitioners that this is the most time-consuming stage of the acquiring process.

Phase 2: Regulatory Licensing (6–18+ months)

There is no time frame for this phase other than the fact that there are significant differences in time frames between countries and the types of licenses that are requested. For example, electronic money institution licenses in the European Union take between 6 and 18 months. Payment institution licenses in some countries are available much more quickly. The preparation for the licensing stage occurs in parallel with the vendor acquisition stage.

Nevertheless, there is no shortcut for obtaining the license for acquiring companies. Additionally, acquiring companies cannot apply for membership with the card schemes until they have obtained regulatory approval for the acquiring company.

Phase 3: Card Scheme Membership and Technical Integration (3–7+ months after licensing)

There will be a requirement to apply for membership in the companies that manufacture the cards that will be acquired by the merchants. This process will occur after obtaining regulatory approval. It will take between 3 and 7 months after regulatory licensing to complete. After receiving approval to become an acquiring company, the technical systems will have to be established with the card manufacturing companies. The initial establishment of the processor can take 3 months.

However, the additional establishment of tokenization and digital wallets for programs like Apple Pay and Google Pay will take an additional 4 months of effort.

Phase 4: Go-Live and Post-Launch Stabilization

The first transaction will not mark the end of your acquiring company’s building process. Many errors will occur with transaction routing, and there will be a stabilization phase after the acquiring company goes live with its operations. Some acquiring software and vendors offer a structured stabilization phase after go-live that includes training and technical efforts to resolve any encountered issues. Others do not. Many acquiring industry practitioners feel that the management of the acquiring company after go-live is just as important as the development and construction of the acquiring company itself.

The Critical Path: Why These Steps Must Happen in Order

To answer the question of why vendor builds must happen in the order in which they do, look no further than the licenses and the card scheme memberships required to legally operate. The licensing requirement comes before the card scheme memberships can be obtained, and the vendor memberships must be obtained before the integrations with the vendor can be completed.

The processor integration will be in the middle of all other vendor integrations within the organization. Should there be a delay in the processor integration for any reason, it will have an impact upon each and every other vendor integration. This is the reason that the processor vendor should be most considered and weighed in the vendor building process for a card acquiring organization.

Should an acquirer choose the wrong processor and have to end their relationship with the vendor after the build of the company’s systems and software, it is as though they have undergone a divorce with that vendor. Should there be a need to change processors after the launch of the acquiring organization, it is as though they have had to undergo another such divorce with the current processor and begin the process of forming a new relationship with another vendor.

Common Bottlenecks That Push Timelines Out

Common Bottanks for timelines to fall short in vendor builds include the regulatory and compliance challenges that the acquiring organization will face, and, secondly, the challenges of identifying the appropriate vendors to which the company will sell its services.

Regulatory and Compliance Complexity

Regulatory challenges include those related to AML (anti-money laundering) regulations, GDPR regulations, and various regulations related to payments including PSD2 and PSD3 that are currently being rolled out across Europe. These regulations are placed upon the acquiring organization even after the organization has launched, and underestimating the infrastructure that must be built to comply with these regulations at the time of startup is one of the most common reasons that acquiring organizations fall short of their go-live targets for their businesses.

Vendor Identification and Due Diligence

Another main challenge for organizations to meet their targets is the finding of the vendors that will be included in their processing systems. Finding these vendors is often one of the most time-consuming steps that is performed prior to the launch of the company. Evaluating the various companies, negotiating with them, and performing due diligence on each vendor is a process that takes longer than the organization’s founders anticipate it will take to complete. Should the vendor be slow in completing the integration with the acquiring organization, they will essentially control the timeline within which the vendor is to be fully operational.

The Accelerated Path: Sponsorship and White-Label Platforms

Another means of reducing the time required to build a card acquiring company is through sponsorship of the company by another acquiring organization that already possesses a license for the card schemes. This process, known as sponsored membership, will eliminate the requirement for the company to apply for a license for each of the card schemes, saving the company 6 to 12 months of build time. This approach is one of the most common methods of reducing the length of time in which a company must undertake the steps required to build an acquiring company without compromising the regulatory license requirements for the organization.

White-label payment processing software and services are another means of accelerating the vendor build process. These platforms have built into them each of the various software integrations for a payment processing company, which reduces that build time from three years to 12 to 18 months. Those that built their own systems in-house and later rebuilt their company’s systems on these vendor platforms note that the vendor platforms were the systems that should have been built in the initial construction phase of the acquiring organization. These in-house infrastructure implementations took years to complete and require the same level of consideration in the build of a company that sells payment processing services. Such infrastructure can be purchased from the vendors and implemented into the company in place of the slow construction of those systems in-house by the acquiring organization.

Furthermore, the practice of building all of the systems in-house for a card acquiring company is thought to be a liability rather than an advantage. One practitioner who has built acquiring companies with both in-house systems and those built upon vendor platforms explained that while the building of the company in-house was the only option available to them when they began their building of acquiring companies, the vendor platform for their systems is the option that they would have have chosen for their initial building of those companies.

How the DECTA Fintech Fast Track Accelerates Your Launch

For acquiring companies that already have licensing and are in the build phase, the DECTA Fintech Fast Track provides an opportunity to reduce the time and the costs that are associated with building the company. Companies that are selected to participate in the DECTA Fintech Fast Track will receive access to DECTA’s payment processing infrastructure at no setup fees, at a reduced monthly pricing structure, and for a value of up to €100,000 in infrastructure and implementation systems, with all of their systems for Visa, Mastercard, and UnionPay International included in that value.

One acquiring company is selected each quarter to work with the DECTA team as they work to build their systems in place. This support from DECTA is beyond simply providing the acquiring companies with their API and then releasing them into the build phase. Such hands-on support is what separates the DECTA Fintech Fast Track from providing onboarding to acquiring companies that already have their systems in place.

What Realistic Costs Look Like Against the Timeline

Building a company that acquires and processes payments will cost more than the founders initially budget for, will take longer than the founders initially plan for, and will require more people than they initially chart for the company’s organizational chart.

In addition to the costs that are directly related to the vendor payments processing companies, there are other costs to consider for acquiring companies. Beyond the costs of labor for the founders of the company, there are licensing fees and costs for the systems that are to be developed. Furthermore, the acquiring company must provide for at least 18 to 24 months of operating capital prior to the launch of their company. If the acquiring company does not account for these costs and headcounts in their initial planning for the company, they will either have to hire more staff or take on more debt to cover these costs after the launch of their organization.

The costs of headcount are one reason that the pre-revenue phase of an acquiring company is the riskiest phase of their building process.

How to Pressure-Test Your Timeline Before You Start

One way to evaluate the viability of a company’s vendor building timeline is to map out each phase of that process against the available runway for that company. Each company has a runway that it can provide for its building and operational process. By establishing each phase of the vendor building process, after establishing the license for the company, determining the membership in the card schemes, and building the systems, they can map each phase against their available runway. If any acquiring company’s vendors are not meeting their targets, it may be the result of not having an optimistic funding horizon for the company and instead planning for one that is built according to the number of months that are required to complete each phase.

Furthermore, the process of selecting and building the company’s systems with its processor vendor can provide valuable information for the acquiring company regarding the quality of vendor’s relationship after the launch of the acquiring company’s systems. The processor with whom they build their systems will play a major role in their technical systems after the launch of their company’s software and systems. It is possible to make a selection of that vendor without properly understanding the quality of their partnership, which is one of the most common mistakes that are made in the building of acquiring companies.