How to Start a Payment Acquiring Business: Complete 2025 Guide

In today's digital economy, payment acquiring represents a lucrative opportunity for entrepreneurs, fintech startups, and financial institutions looking to expand their service offerings. This comprehensive guide will walk you through the essential steps to establish a successful merchant acquiring business, from understanding the fundamentals to launching and scaling your operations.

Payment acquiring is the entity that processes card payment transactions for a merchant. To understand the full process, consider what has to happen before someone can ultimately run such a business and note the following:

This four-party model (customer/merchant/acquirer/issuer) is how payment processors work across most of the globe, with large dependability on the acquirer for proper function.

An acquirer must have multiple revenue sources in order for such a business to be successful and grow.

Interchange Discount

First, acquirers take a small percentage of every transaction from merchants; this percentage goes toward interchange fees paid to the issuing bank. This percentage of gross transaction totals is typically 0.1-0.2% of any transaction, although this varies by type of card, merchant category and volume. Such interchange fees are set by card networks and go a long way toward how a viable acquirer can earn.

Markup Fees

Beyond interchange fees, acquirers charge their own markup fees which are assessed merely to keep the lights on. Markup fees can be percentage-based fees or flat fee transactions and can be negotiated for higher-volume merchants. This gives acquirers a competitive pricing edge.

Monthly Fees

Many merchants pay monthly fees to their acquirers just for having the account, for statement generation, and for providing access to payment processing. These are predictable fees for the acquirer that lend support beyond minute-by-minute fees required for transaction processing. These fees can fluctuate based on service plans in accordance with various features.

Chargeback Fees

When merchants receive chargebacks from customers disputing transactions, acquirers charge merchants chargeback fees. These go toward the merchant's costs to assess chargebacks since chargebacks can be problematic across multiple segments of operations and revenue collection. Chargeback fees exist not only as revenue streams but also as deterrents, charges assessed to encourage merchants to serve customers better and effectively minimize fraud.

Value-Added Services

In recent years, acquirers have collected great revenue from fee-generating activities that implement value-added services beyond the basic payment processor. These include:

Many of these value-added services afford acquirers new streams of revenue and market differentiation. They also serve to elevate an acquirer from a simplistic payments-processing entity to a strategic business partner.

The Essential Licenses: PI vs. EMI

As a payment acquiring company, you must apply for one of the below licenses based on your business model, your current operating capital, and your potential future services.

Payment Institution (PI) License:

Electronic Money Institution (EMI) License:

Licensing and compliance overlap with regulatory expectations, such as Anti-Money Laundering (AML) requirements, data protection measures, and regulatory reporting to agencies. The review of the licensing application takes 3-6 months. In addition, you must submit a detailed outline of your business intentions, including a risk assessment plan and overview of potential revenue.

Partnering with a Sponsor Bank

If you're not a bank, then you need a sponsor bank to facilitate the partnership process, as only banks can be direct sponsors of the card networks. The advantages of being sponsored by a bank include:

1. Card Network Access: Sponsor bank serves as the intermediary between the sponsor and the card networks (Visa/Mastercard), meaning you can operate through these companies without needing to be a bank yourself.
2. Bank Identification Numbers (BINs): The banks provide the Bank Identification Numbers (BINs) required to process and activate cards in the first place. A BIN is a type of identification within the payment space.
3. Settlement Services: They also provide settlement services using various entities within the payments space, providing transaction management between merchants, acquirers, and issuers.
4. Risk Sharing: The banks will share liability for the merchants for whom you partner; however, they are still liable for compliance and any banking-related obligation.

You'll want to choose a bank that suits you—compatible values, trust—as this will be the partnership that makes your acquiring service business. The bank will also want to see your risk management and operational effectiveness as it will need to audit your risk management and underwriting processes. Founder fees for BIN sponsorship generally are an onboarding fee ($25,000-$100,000), monthly fees ($5,000-$20,000), per transaction fees and annualized BIN sponsorship fees ($10,000-$50,000).

Card Network Authorization (Visa/Mastercard)

Obtaining Visa/Mastercard authorization through card networks takes a lot of time and money:

1. Time to Complete Licensing: Average of 3-6 months depending on the complexity of the application and types of licensing needed.
2. Requirements/ Necessities: Showing financial stability, showing resources for adequate technical work and following network requirements (PCI DSS certification, fraud prevention measures).
3. Principal Membership/Sponsorship: You can directly apply as a principal membership (this is for banks/financial institutions) or go through a sponsor bank. Each has its pros/cons in terms of cost and compliance requirements.
4. Fees: Membership fees ($50,000-$200,000 per network); assessment fees (ongoing percentage of transaction volume; setup fees ($10,000-$30,000); annual fees ($10,000-$50,000).

This authorization is necessary to legally process payments on the merchant's behalf and access international payment systems. Each card network has different required minimums and card network fee structures which should be factored into an organizational feasibility study.

Core Regulatory Obligations

There are many regulatory requirements to ensure licensed processors exist and a safe payment marketplace is maintained:

1. Anti-Money Laundering (AML)/Know Your Customer (KYC) Compliance: Anti-Money Laundering/Know Your Customer processes require having systems in place to prevent financial crimes and control expectations from consumers. For instance, a payment acquirer needs to vet merchant identity to ensure no scams operate and they should be obliged to report any fraudulent behaviour to protect unsuspecting business people.
2. Payment Services Directive (PSD2)/Strong Customer Authentication (SCA): Payment Services Directive (PSD2) and Strong Customer Authentication regulation require further security of the payment processing experience within the EU. Fraudulent transactions require two-factor authentication.
3. Data Security (PCI DSS Level 1): PCI DSS certification signifies the highest level of security for cardholder data. Requirements include input for network security, vulnerability resolutions, access control solutions, employee training, and subsequent testing.
4. Consumer Protection Laws: Compliance with any region's consumer protection laws is necessary for fair treatment of all cardholders and merchants alike. Consumer protection laws differ by country but generally involve dispute resolution, chargebacks and refunds, and transparent fee disclosure.
5. Audits and Reporting: Continuous audits and reporting are required. For PCI, quarterly network scans and annual compliance assessments are required for compliance.

Failure to comply will result in fines, bad press, and possibly revocation of license to operate. Thus a compliance team must be put into place to constantly monitor these efforts.

The Build vs. Buy Decision: Critical Analysis

As you create your technology infrastructure, you will need to make necessary assessments that will impact your time-to-market, cost structure, and long-term flexibility.

From Scratch:

White-Label Payment Gateway/Payment Platform-as-a-Service (PPaaS):

Ultimately for most new entrants into the marketplace, a White-Label Payment Gateway is the best option, as this gives you capital to spend elsewhere in your business, rather than dumping it all here. In addition, it allows for less PCI DSS compliance exposure, since a white-label provider will help reduce most of this compliance burden.

Core Technical Capabilities Required

Whether you build or buy, whether you get a platform, you need the following components:

1. Transaction Processing Engine. The technology that handles authorization, clearing, and settlement to perform the necessary transactions that are the lifeblood of your acquiring business.
2. Merchant Management Portal. The all-in-one solution that processes merchant onboarding and underwriting, account management, and payout processing.
3. Risk & Fraud Management Tools. The real-time monitoring engines with dynamic rules engines mitigate fraudulent activity.
4. Reconciliation Systems & Settlement Systems. The accurate fund flow management systems ensure proper reporting between all parties involved in the payment process.
5. Reporting & Analytics Dashboard. The business intelligence tools that explain volumes processed, revenue generated, merchants successes/failures.
6. API Integration Layer. The systems that connect bank connections, card network integration, merchant system integration and payment gateways allow data flow.

These components must work together seamlessly while maintaining the highest levels of security and reliability to ensure successful operations.

Phase 1: Research & Planning

It always starts with in-depth market research and assessment.

1. 1. Market Research & Target Audience Segmentation: Determine niche and clientele by navigating various markets (SMBs (Small and Medium Businesses), high-risk merchants, and industries) and their vertical-specific payment needs.
2. 2. Business Plan & Financial Model: Develop detailed projections around capital requirements, revenues, and investment needs.
3. 3. Legal Entity Formation & Jurisdiction Registration: Establish a legal business structure that meets all registration requirements and properly filings with entities in the desired jurisdiction.

This will take approximately 2-3 months as this is a pivotal assessment to determine how to pragmatically proceed with operations in establishing an acquiring company.

Phase 2: Securing Foundations

After practical planning established groundwork, regulatory requirements and banking foundations need to be established.

1. 1. Relevant Licenses: File to be a PI license (Payment Institution) or EMI license (Electronic Money Institution) depending on your chosen model and jurisdiction.
2. 2. Sponsor Bank Partnership: Reach out to necessary sponsor banks to establish agreements for card network access and settlement services.
3. 3. Banking Partner Relationships: Open operational accounts for business needs separate from settlement accounts.

This part of the process requires a significant time to wait since licensing and regulatory reviews can take anywhere from upwards of 6-12 months.

Phase 3: Building & Integrating Technology

Now, it's time to build the technological framework.

1. 1. Core Technology Selection: Choose to develop a custom-built platform or use a white-label solution based on previous research.
2. 2. Card Network Integration: Integrate with relevant card networks (Visa/Mastercard connectivity, etc.) either directly or through sponsor banks.
3. 3. Payment Gateway Integration: Integrate all necessary gateways/banks for fund flow setup.
4. 4. Development of Merchant Portal & API Configuration: Develop configurations for portals and merchant access and transaction payments.

Depending on how complex this all is, it can take anywhere from 3-6 months for white-label solutions to 12+ months for in-house development.

Phase 4: Establishing Operations

Now that the technology is established, operations need to be established.

1. 1. Establishment of Underwriting Framework & Risk Management Tools: Creation of policies and staffing solutions to enact tools for risk communication.
2. 2. Merchant Onboarding Processes & Support: Establishment of onboarding and support tools.
3. 3. Settlement and Reconciliation Workflows: Establish processes for settlements and accurate reconciliations of transactions.
4. 4. Core Team Assembly: Start hiring for sales, operations, and compliance staffing.

This usually takes a solid 2-4 months for implementation.

Phase 5: Testing, Launch & Beyond

Then, it's time for testing/commercial launch once you've prepared everything necessary for ongoing growth.

1. 1. Testing: Compliance testing and security testing (PCI DSS audits).
2. 2. Pilot Program: Engaging selected merchants to ensure proper operation.
3. 3. Commercial Launch: Marcomms mixed with sales efforts for expanded exposure.
4. 4. Ongoing Monitoring & Infrastructure Scaling: Work on all improvements for security optimization and scaled merchant solutions.

Technical testing/Pilot program should take 1-2 months with full commercial readiness duration of another 1-2 months.

Merchant Underwriting Models

The second reaction to risk management is merchant underwriting which occurs in one of two fashions based on one's risk tolerance and ability to maintain:

Traditional Underwriting (Full KYC (Know Your Customer)/Due diligence (DD)):

PayFac-Lite Model (Sub-merchant aggregation):

Ultimately your decision should match up with required risk management while still allowing for a positive merchant experience with operational efficiency. Note that frequently, the acquirers take a hybrid underwriting approach with the PayFac-Lite model for lower-risk situations and the traditional underwriting approach when high-risk situations are thoroughly substantiated.

Building a Robust Risk Management Framework

A risk management framework includes the following sources of coverage to protect your business and your merchants:

• 1. Fraud Prevention: Appropriately applied tools exist that, through machine learning fraud detection and rules-based systems, can determine and control fraud prevention. The best fraud systems can recognize when something is wrong in real-time, and assess transaction pattern analysis, customer behaviour analytics, and merchant activity monitoring to create a positive or negative response.
• 2. Chargeback Management: Tools exist to avoid dispute prevention over a transaction with the least amount of financial impact in the world. The risk management framework fosters root cause analysis of why these occurrences take place so that they are not repeated.
• 3. Credit Risk Assessment: Assess your merchants to see if there are issues before they escalate. Merchant financial monitoring with gradually failing financial indicators should be universally assessed on a regular basis.
• 4. Portfolio Monitoring: Continually reviewing Merchants for activity inconsistencies within ported accounts. This begins with assessing credit health and accounting practices and ends with assessing merchants' transaction anomaly detection flagged by risk management professionals.
• 5. Real-time Transaction Monitoring: Use specific rules-based systems to suspicious transactions flagging while processing and send them to manual risk reviews for review. This allows the transaction not to be blocked while disputable transactions are being assessed.

This risk management framework must be adjusted over time since, without incremental testing support systems, increased threats and a growing merchant portfolio will only harm. Upgrading and changing systems is necessary for continued safety against such risk.

Ensuring Ongoing Regulatory Compliance

Compliance isn't a one-time deal. Resources must continuously be gathered, and processes must always be implemented:

1. AML/KYC Refreshes: Annually or quarterly updates for your anti-money laundering compliance and Know Your Customer processes. Any ownership change reviews require a periodic refresher. Review suspicious changes in transaction patterns, and determine which programs will require risk assessment updates.
2. PCI DSS Maintenance: Maintain quarterly network scans performed in-house as well as annual assessments of PCI DSS recertification. Maintenance of ongoing compliance includes hourly security updates, continual vulnerability management implementations, and vulnerability elimination.
3. Regulatory Reporting: All mandated reports for state and federal regulators must be submitted in a timely, accurate, and complete fashion. This includes suspicious activity reports, transaction volume reports, etc.
4. Compliance Audits: Internal/external audits must occur regularly to ensure compliance has been adhered to. This includes how you onboard merchants through educated expected regulatory compliance.
5. Staff Compliance Training: Employees receive role-specific regulatory training relevant to job function at least annually. Testing for mastery and up-to-date knowledge should be required as regulations evolve.

This relates to the compliance team, or at least one regulatory liaison, to facilitate this process correctly. This person/entity will keep track of what's needed, and maintain a definitive relationship with compliance officials, and compliance activity coordination efforts across disciplines for responsibility.

Defining Your Value Proposition

Every acquirer should have a value proposition. Think about:

1. 1. Competitive Pricing: Transparent fee structures yet still profitable to your company.
2. 2. Niche Expertise: Industry specialization in only limited industries/merchant types you could serve better.
3. 3. Technological Advantages: If your technology will process payments with faster processing, and integration capabilities, or have enhanced security features, frame them as the ability to acquire/retain customers.
4. 4. Value-Added Services (VAS): Serving merchant pain points outside of what payment processing entails.

You want to make sure your value proposition positions you toward what specific merchants need that larger, more generalized acquirers cannot specifically focus on.

Sales Channels

Acquiring merchant customers is all about distribution. Therefore consider the following sales channels:

1. 1. Direct Sales: A direct sales in-house sales team attuned to specific merchant segments.
2. 2. Independent Sales Organizations (ISOs)/Sales Agents: Independent Sales Organizations and sales agents who can sell on your behalf.
3. 3. Technology Partnerships: When other software platform integrations use or need payment, collaborate with technology platforms, e-commerce solutions, etc., servicing your core merchants.
4. 4. Digital Marketing: Consider a targeted online campaign approach focused on acquisitions and lead generations.

The best working channel is usually a hybrid; however, it all depends upon your target market and value proposition.

Essential Value-Added Services (VAS)

Become differentiated as an acquirer with:

1. 1. Gateway Services: Offer more than just payment processing via a payment gateway with possible tokenization or recurring billing.
2. 2. Fraud Prevention Tools: Merchants worry about fraudulent merchants; let them know they won't have to with advanced fraud detection preventing it.
3. 3. Analytics Platforms: Help access business growth with analytics platforms and reporting dashboards.
4. 4. Multi-Currency Processing: Charge competitive exchange rates to companies wanting to accept payments in other currencies.
5. 5. Alternative Payment Methods: Merchants should instead feel free to have them pay either through Buy Now Pay Later (BNPL), digital wallets, or local payment methods.
6. 6. POS Solutions: Physical merchants may need assistance with integrated hardware and software at POS.

Value-added services help create additional streams of revenue and enable retention of merchants who would rather have an integrated solution than pay for services separately.

Scaling Your Acquiring Business

Once you've established yourself, consider scaling strategies to grow:

1. 1. Geographic Expansion: Ensure you're properly registered to do business in other areas down the line; regulatory approvals are key.
2. 2. Vertical Specialization: Vertical specialization brings things to another layer; and gives more industry leadership insights/tools via acquisition.
3. 3. Payment Method Expansion: The need for emerging payments comes from the forward-thinking merchant looking for nontraditional payment.
4. 4. VAS Portfolio Development: Merchants will wonder what else you can do for them beyond acquiring; listen and create services based on merchant feedback integration.
5. 5. Strategic Partnerships: Other complementary service providers always accompany acquiring in the merchant world; strategic partnerships create comprehensive merchant solutions opportunities.

When thinking about expansion, be cognizant of growth vs risk management and understand your operational scalability can only handle so much growth at once before compromising client experience.

Startup Cost Ranges

Starting a payment acquiring business costs $50,000-$150,000 for small-scale regional operations, $100,000 to $300,000 for niche-focused operations, $250,000-$1,000,000 for mid-sized national platforms, and $2,000,000-$5,000,000 for international platforms.

This includes custom software developed in-house or by a third party and integration processes with banking partnerships and regulatory compliance as well as the need to have corporate overhead. Small companies looking for a niche market with open-source development and cloud services can start at $100,000-$300,000. Investors recommend budgeting for the project with up to a contingency fund (10–15%) in miscellaneous costs that will inevitably pop up.

Major Cost Components

Platform development is the most significant cost ranging from $100,000-$300,000 for custom software, API development, and cloud services. Banking partnerships and merchant partnerships integration or account setup fees will require an investment of $50,000 to $150,000, which includes legal fees and time spent on integration processes.

Regulatory compliance and regulatory filings are $40,000-$100,000; IT infrastructure costs $60,000-$180,000; branding and marketing costs $10,000-$50,000; customer support infrastructure $20,000-$80,000 (including CRM systems and staff training); research and development (R&D) is $50,000-$120,000 for required product enhancements and market analysis; strategic partnerships/third-party service integrations/fintech collaborations is $25,000-$75,000; analytics and reporting systems requiring AI tools/dashboards is $35,000-$90,000.

Launching your own payments acquiring business is one of the most challenging yet most lucrative opportunities available in the digital economy. Regulatory requirements, technology infrastructure, and risk management suggest that much effort goes into planning before capital investment.

Although many estimate a typical 12–24 month launch timeline with capital investment starting in the hundreds of thousands, those in the know with focused adjustments can see a positive return on investment for years to come through multiple revenue streams. Merchants will be seeking ongoing innovative services as payment continues to rapidly evolve. Operational excellence must go hand-in-hand with ever-changing innovative services that keep merchant needs interested.