Payment acquiring license in Spain: becoming an acquirer

Acquiring is the service by which a provider contracts with merchants to accept, process and settle the card payment transactions they receive, transferring the funds to the merchant. It is one of the payment services listed in PSD2 and Royal Decree-law 19/2018.

Because it involves settling merchants’ funds, acquiring goes far beyond mere technology: it is a regulated activity.

The acquirer is the payment service provider that provides acquiring: it contracts with the merchant, is a member of the card schemes (or is sponsored), processes the transactions and settles the funds to the merchant, and also handles chargebacks.

It can be a payment institution, an electronic money institution or a credit institution.

Yes. Providing acquiring means providing a payment service, so it requires authorization from the Bank of Spain as a payment institution, electronic money institution or credit institution.

An alternative is to operate as a payment facilitator or distributor under the umbrella of an authorized acquirer, but that also carries obligations and, depending on the flow of funds, may require a license of your own.

The interchange fee is the amount the acquirer pays the card issuer for each transaction. It is regulated by Regulation (EU) 2015/751, which sets caps: as a general rule, 0.2% for consumer debit cards and 0.3% for consumer credit cards.

It is one of the three cost components passed on to the merchant, together with the scheme fee and the acquirer’s margin.

A payment facilitator (PayFac) aggregates sub-merchants under its own contract with an acquirer, simplifying onboarding and day-to-day operations for small merchants.

It takes on due diligence on sub-merchants and risk management; depending on how the funds flow, it may need its own authorization as a payment institution.

They differ in their function and in whether they settle funds:

• The gateway provides the technology that transmits the transaction data.
• The acquirer contracts with the merchant, processes and settles the funds, with a license and access to the schemes.
• The aggregator or facilitator groups merchants under an acquirer and may handle the funds.

A single player can combine several functions, but each layer has its own regulatory fit.

Card schemes (such as Visa or Mastercard) are the networks that set the technical and commercial rules for card transactions. The acquirer must be a member of the scheme or be sponsored by a member in order to settle transactions.

Regulation (EU) 2015/751 introduced business rules for these schemes, such as the separation of scheme and processing.

Among others: transparency in the breakdown of fees (interchange fee, scheme fee and margin), pre-contractual information, a clear acquiring agreement, chargeback handling and compliance with conduct and security rules.

Fee transparency toward the merchant is an express requirement of Regulation (EU) 2015/751.

The MDR is the total fee the merchant pays the acquirer for each card transaction. It is made up of the interchange fee (to the issuer), the scheme fee (to the network) and the acquirer’s margin. The most transparent pricing model (“interchange++”) breaks down these three components.

The Interchange Fee Regulation generally caps the interchange fee on consumer cards at 0.2% for debit and 0.3% for credit. It also introduces business rules (separation of scheme and processing, co-badging, limits on the honor-all-cards rule and transparency toward merchants).

It is a rule of Regulation (EU) 2015/751 that requires independence between the card scheme and processing entities, in accounting, organizational and decision-making terms, in order to promote competition and prevent practices that close the market to other processors.

Co-badging is the inclusion of several payment brands on the same instrument (for example, a card that works with two schemes). Regulation (EU) 2015/751 recognizes the right to co-badging and leaves the choice of brand, where applicable, to the payer or the merchant under the applicable rules.

If it operates as a payment institution, acquiring is among the payment services with the highest requirements: the indicative initial capital is €125,000, plus the own funds required according to volume. The exact amount is validated against the services provided.

The supervisor of payment services in Spain is the Bank of Spain, which authorizes and supervises acquirers. On interchange fees and competition rules, the competition authorities are also involved, and on anti-money laundering, SEPBLAC.