What are the 4 Pillars of Acquirer Risk?

February 28, 2024

Acquirers, like other players in the payments ecosystem, make money through facilitating transactions. The more risk associated with the Merchant and their transactions, the larger the margin. But it isn’t always as simple as underwriting every Merchant, it’s more of a balancing act. And that balance can be guided by 4 areas of risk. Let’s unpack each area of risk and what that means for Acquirers.

What are the 4 Pillars of Acquirer Risk?

Acquirers follow strict guidelines set by regulatory bodies and Card Associations. Like a Merchant, when an Acquirer breeches their compliance thresholds, they can be fined, see hikes in prices, or potentially lose relationships with Card Networks. Acquiring risk can be broken down into reputation, regulation, compliance, and litigation.

Reputation – Saving Face
Reputation is huge for every Acquiring bank. It’s what brings in new and recurring business, attracts top talent, and strengthens partnerships. And in the end, it’s what rules out certain Merchants as too risky for certain Acquirers.
Examples of reputational risk can be a Merchant’s brand integrity, previous misconduct or litigation, product vertical, and media scrutiny on the industry or executives working for the Merchant.
Regulation – Staying in Line with the Law
High-risk industries selling products like gambling, crypto, or alternatively, using marketing techniques such as a negation option or subscriptions, will have trouble finding an Acquirer. That’s because Acquirers need to follow strict Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, PCI guidelines, and adapt to ever-changing rules around data privacy, consumer protections, and marketing practices. Processing payments for products and services in these higher risk industries can expose the Acquirer to fines and potential (and devastating) loss of Network relationships. These industries are also heavily monitored by regulatory bodies.
Compliance – Staying in Line with the Networks
Acquirers have strict compliance guidelines with the various Card Networks. Fraud, chargebacks, and other disputes all take time, resources, and money to deal with. Too many cardholder disputes can lead to a potential loss of revenue, partnerships, and the threat fines. This is one reason that Merchants without a history of transaction volume, or who have a trend of growing disputes, can have trouble finding a Merchant account.
Examples of compliance risk can include high chargebacks or reported fraud across the Merchant portfolio, insufficient KYC or AML policies, sanction violations, and poorly managed tax and accounting records.
Litigation – Saving Wallet
Lawsuits or regulatory investigations can be expensive, time consuming, and reputationally devastating for Acquiring Banks—just look at Silicon Valley Bank or Fresno First Bank. Litigation or investigations can hit an organization at any time. Defending yourself in one of these scenarios can easily cost hundreds of thousands of dollars, even if you’re exonerated of any wrongdoing.

What Does this Mean for Merchants

Risk is the reason getting underwritten for a Merchant account is difficult, time consuming, and expensive. And once underwritten, Merchants are then onboarded, which includes more agreements and training for fraud prevention, chargeback reduction, regulations, data security and more.

Barrier to entry might sound negative, but it can also be a net positive in the long run. Strict thresholds and enforced risk profiles can mean a safer payments ecosystem. They help remove bad actors, reduce fraud in the marketplace, promote safer transactions, and even reduces chargebacks.

How Can Acquirers Better Manage Their Risk Exposure?

Once a Merchant is onboarded, it can be only a matter of weeks until they start breeching compliance thresholds—especially with high-risk Merchants in a volatile industry. Sifting through the vast amount of disparate datasets looking for anomalies and potential risk landmines can be overwhelming. And, in this case, time is not on your side. Everyday a risky Merchant, affiliate, or campaign lives in your portfolio, the bigger the threat becomes.

That’s where Slyce360 comes in.

Slyce360 acts as a force multiplier for your underwriting department.

It runs behind the scenes, letting you easily track growing payment trends in your portfolio of Merchants. If Issues start becoming problems, Slyce360 drills into the root causes, and generates prescriptive action plans.

This kind of insight doesn’t just resolve problems, it reshapes how Acquirers manage risk at scale.

For Acquirers, sustainable portfolio growth depends on more than just onboarding volume. It requires disciplined, data-driven oversight. Slyce360 equips your team with the tools to identify emerging risks, segment portfolios with precision, and support Merchants with clarity and speed. From chargeback management to fraud trend monitoring, Slyce360 transforms risk management into a strategic advantage—helping you protect your relationships, unlock margin, and take control of your portfolio’s future.