Point-of-Sale Acquiring

Point-of-sale acquiring is the part of merchant acquiring that handles card payments made in person at a shop, restaurant, fuel station or other physical site. The acquirer supplies or certifies the terminals, captures each transaction, sends it for authorisation, and later settles the funds to the merchant. Transactions of this kind are called card-present payments, because the card or a phone holding it is physically at the till.

It is usually contrasted with e-commerce acquiring, which handles card-not-present payments, though many acquirers offer both and merchants increasingly want a single view of in-store and online sales. Point-of-sale acquiring is governed by the merchant acquiring agreement, card scheme rules and terminal security standards.

When a customer taps a card at a café, three things must happen. The café's machine needs to read the card safely, someone needs to ask the customer's bank whether the money is there, and later the café needs to receive the money in its own bank account.

A point-of-sale acquirer takes care of all three. It provides or approves the card machine, passes each payment request through the card network to the customer's bank in a second or two, and at the end of the day collects the money from all the payments and pays it to the café, keeping a fee for the service.

1. The payment terminal reads the card through the EMV chip, the magnetic stripe or a contactless tap using near field communication, and the cardholder may enter a PIN.
2. The terminal sends an authorisation request, carrying a chip cryptogram, to the acquirer or its processor, which forwards it through the card network to the issuer.
3. The issuer approves or declines and the result appears on the terminal.
4. Approved transactions are captured, often in an end-of-day batch, and submitted for clearing.
5. The acquirer receives funds through scheme settlement and pays the merchant, net or gross of fees, on the agreed schedule.

Merchants can use countertop terminals linked to a till system, portable terminals for table service, mobile point-of-sale readers paired with a phone, or software that turns an ordinary phone into a terminal. Unattended terminals serve vending machines, car parks and fuel pumps. Terminals must be certified to EMVCo and PCI device security standards, loaded with the right keys and kept up to date, and many acquirers rely on specialist terminal service providers to deploy and maintain them. Value-added services at the terminal include tipping, split bills, loyalty and dynamic currency conversion for foreign cardholders.

Card-present transactions usually carry lower interchange than online ones in many markets, because chip and PIN or contactless cryptograms make fraud harder. The main remaining risks are lost and stolen cards, counterfeit cards made from skimmed data, and fraud by staff or by merchants themselves. Under the EMV liability shift adopted by the major schemes, which took effect in the United States in October 2015, the party with the less secure technology generally bears the cost of counterfeit fraud, which pushed merchants to upgrade from magnetic stripe. Terminal tampering and card skimming remain concerns, so acquirers require regular terminal inspections.

Chargebacks are less frequent than online, but disputes still arise over goods not received, duplicate charges and incorrect amounts. Merchants with large in-store volume can negotiate lower rates and next-day or same-day settlement.

Several layers of rules apply at the point of sale. Card scheme rules set how terminals must prompt for verification, how receipts and refunds are handled and how quickly transactions must be submitted. Security standards from the PCI Security Standards Council cover the physical and logical security of PIN entry devices and the handling of card data in the merchant's systems. In the European Union and the United Kingdom, strong customer authentication rules apply to in-person payments too, with exemptions for low-value contactless transactions up to set single and cumulative limits, after which the terminal asks for a PIN. Countries also set their own contactless limits and, in some cases, rules on surcharging card payments at the till.

In many countries a few large banks and processors dominate point-of-sale acquiring, with independent sales organisations and payment facilitators reselling their services to small merchants. Domestic debit schemes can matter a great deal at the till, as with local PIN networks, so a merchant often benefits from local acquiring rather than relying on a foreign provider. Recent trends include integrated software platforms that bundle the till system and acceptance, faster settlement and the gradual decline of magnetic stripe as schemes phase it out. For merchants serving visitors from abroad, the relationship with cross-border card acquiring and currency conversion can be significant.