Merchant acquiring is at the heart of how businesses accept payments today, and 2024 is shaping up to be a pivotal year for both online and offline payment systems.
With technology evolving and customer expectations shifting, it's no wonder that merchants are adopting newer and more innovative ways to make and accept payments.
What Are the Key Online and Offline Merchant Acquiring Trends in 2024?
Let’s start by talking about how merchant acquiring itself is booming—especially in markets like India, where digital transformation is accelerating faster than ever.
As governments push for cashless economies and businesses adopt digital payments, merchant acquisition is skyrocketing.
This is particularly true in sectors that are becoming more inclusive and digital-friendly, enabling small and medium enterprises (SMEs) to onboard with minimal hassle and cost. This not only boosts the digital economy but also helps more businesses join the formal financial ecosystem, making financial inclusion a reality.
Whether you’re running a brick-and-mortar store or an e-commerce platform, staying updated with the latest trends in merchant acquisition is essential to staying competitive.
Offline Merchant Acquiring: A Rapidly Changing Landscape
While the world is going digital, offline merchant acquiring is far from slowing down. In fact, it’s evolving at an incredible pace, blending old-school methods with modern innovations.
Let’s look at a few of the key trends driving this space in 2024:
1. The Shift from POS to QR Codes
It’s no secret that QR code payments are taking over, and for good reason! Merchants are making a noticeable shift from traditional Point-of-Sale (POS) systems to QR codes, thanks to their ease of use, lower costs, and the fact that they don’t require expensive terminals.
In India, for example (source: PWC report)
QR code usage has seen an astonishing 34% growth in FY24
, And over 352 million QR codes deployed nationwide.
What’s even more exciting is that merchants using platforms like UPI (Unified Payments Interface) benefit from zero MDR (Merchant Discount Rate) charges, making QR codes a go-to payment option.
Whether you're a small street vendor or a growing retail chain, QR code payments are revolutionizing how payments are processed.
2. POS Systems Are Still in the Game (But Evolving)
While QR codes are getting a lot of attention, POS systems aren’t going away just yet. Instead, they’re evolving to meet the demands of modern merchants. These days, POS systems come equipped with contactless payment options, integrated loyalty programs, and even data analytics to help businesses better understand their customers.
The numbers back this up: POS terminal deployments increased by 14% in FY24, with a total of 8.9 million POS terminals now in use across India.
These advancements are making POS systems more than just payment processors—they're now key tools for customer engagement and business growth.
3. Soundboxes: The Unsung Hero in Merchant Payments
Now, here’s a trend you might not have heard much about but is making waves: soundboxes. These nifty devices are starting to pop up alongside QR codes, particularly in regions where cashless payments are booming. But what exactly are soundboxes, and why are they important?
Soundboxes provide instant voice confirmations of payments, letting both merchants and customers know when a transaction has been completed successfully. This simple yet effective tool is reducing payment errors and helping to combat fraud.
With soundboxes, merchants don’t need to check their phones or wait for a notification—they hear it loud and clear. It’s all about creating a smoother, more trustworthy payment experience.
4. Cross-Selling Financial Services: Adding More Value for Merchants
Here’s where things get even more interesting. One of the most exciting trends in offline merchant acquiring is the surge in cross-selling financial services.
No longer are acquiring players simply focused on processing payments; they’re branching out to offer merchants additional services like lending, insurance, and even savings accounts.
So, how does this work? Imagine you’re a small business owner who uses a QR code system for payments. Based on your transaction history, your acquiring bank might offer you a custom loan product tailored to your cash flow.
This makes it easier for businesses to get access to credit and grow their operations. And for payment providers, it opens up new revenue streams and helps deepen engagement with merchants.
Online Merchant Acquiring: The Key Trends
In recent years, the rise of digital payments has led to a surge in online merchant acquisition, particularly in countries like India, where a strong push towards a cashless economy has fueled this growth.
The government’s initiatives, combined with rapid advancements in technology, have empowered businesses to onboard merchants quickly and affordably.
1. The Rise of Buy Now, Pay Later (BNPL)
One of the greatest trends in online payments right now is Buy Now, Pay Later (BNPL). If you’ve ever shopped online and noticed the option to pay in installments without any interest, you’ve experienced BNPL firsthand.
This payment option has exploded in popularity, and it’s easy to see why.
Platforms like Klarna, Afterpay, and PayPal’s “Pay in 4” are leading the charge, and in 2024, you can expect BNPL to continue expanding its footprint, not just in developed markets but also in emerging ones.
If you’re an online merchant, adopting BNPL could give your business a competitive edge by offering your customers more ways to pay.
2. Omnichannel Payments: Unifying the Customer Experience
In 2024, it’s no longer enough to just have an online store. Customers expect a seamless experience across all touchpoints—whether they’re shopping on your website, mobile app, or even in your physical store. This is where omnichannel payments come into play.
Omnichannel payment solutions allow merchants to offer a unified experience, where customers can start a purchase on one platform and complete it on another.
Imagine browsing for a product on your phone and later finalizing the purchase on your desktop or picking it up in-store. This flexibility is quickly becoming the norm.
3. Payment Gateway Market Growth: A Booming Industry
First, let’s talk about the incredible growth of the payment gateway market. As digital transactions skyrocket, so does the demand for efficient, secure, and user-friendly payment gateways.
This surge in demand is not just a passing phase—it’s a long-term shift that’s changing how businesses of all sizes operate.
In India, the payment gateway market size has grown to INR 117.80 billion in FY23-24
with expectations of it expanding to INR 259.06 billion by FY28-29.
This remarkable growth is being driven by the rapid adoption of online shopping, increased penetration of mobile payments, and government initiatives promoting cashless transactions.
How Offline Merchant Acquisition is Growing Through the QR Boom?
If you've noticed more businesses accepting payments with just a quick scan of a QR code, you're not alone.
The QR code boom has been nothing short of transformative for offline merchant acquisition, especially in regions where traditional payment infrastructure is costly or impractical.
What started as a simple alternative to card swipes has evolved into a full-blown revolution that’s reshaping how businesses accept payments and engage with customers.
Over the past three years, the deployment of QR codes has seen a remarkable 50%+ CAGR.
This rapid expansion is being fueled by a combination of technological advancements, the simplicity of QR codes, and strategic pushes from banks, non-banking financial companies (NBFCs), and fintech firms.
But what's behind this boom, and why are QR codes becoming the go-to solution for offline merchant payments?
1. New Players in the QR Boom: A Game-Changer for Merchant Acquisition
One of the biggest factors contributing to the rise of QR codes is the influx of new players in the payment space. From traditional banks to nimble fintech firms, companies of all sizes are tapping into QR codes to scale their merchant networks quickly and affordably.
Why QR codes? For starters, they require minimal infrastructure to implement. Unlike traditional POS terminals, which can be expensive and complex to set up, QR codes only need a smartphone and a printout to function.
This makes it easier for banks and fintechs to onboard merchants at a fraction of the cost, particularly in areas where formal banking infrastructure may be lacking.
But it’s not just about convenience—it’s about competition. As more companies enter the QR payment space, the race to capture market share is accelerating.
2. Expanding to Tier II and III Cities: Bridging the Financial Inclusion Gap
One of the most exciting aspects of the QR boom is its role in expanding digital payments to tier II and III cities. Traditionally, these smaller cities and rural areas have been underserved by traditional banking systems.
The cost of setting up brick-and-mortar branches and POS infrastructure often left small businesses and local vendors unable to participate fully in the digital economy.
Enter QR codes. Thanks to their low setup costs and ease of use, QR codes are now enabling merchants in smaller towns and cities to accept digital payments with minimal hassle.
This penetration into underserved markets is a huge step forward in terms of financial inclusion—giving small business owners access to a broader audience while allowing customers to pay digitally, even in remote areas.
3. Why Merchants Prefer QR Codes: Simplicity and Cost-Effectiveness
From street vendors to high-end retailers, merchants are increasingly embracing QR codes as their preferred payment method. Why? Convenience and cost-effectiveness are the name of the game.
Unlike traditional POS systems, which can come with hefty installation fees, monthly rentals, and maintenance costs, QR codes offer a low-cost alternative.
All merchants need is a printed QR code and a mobile device to start accepting payments instantly. For small businesses and entrepreneurs operating on thin margins, this makes a world of difference.
Another major factor driving QR adoption is the widespread use of UPI (Unified Payments Interface). UPI’s seamless and instant payment experience has become a huge hit with both merchants and customers.
4. Cross-Selling Opportunities: Unlocking New Revenue Streams for Merchants
The QR code boom isn’t just about processing payments—it’s opening up a whole new world of cross-selling opportunities.
Payment providers and fintech companies are using QR code transactions as a gateway to offer merchants additional financial products and services, such as lending, insurance, and savings products.
Here’s how it works: as merchants use QR codes to process payments, payment providers collect valuable data on their cash flow and sales patterns.
Armed with this data, companies can offer tailored financial solutions—like loans to help businesses expand or insurance products that meet their specific needs.
What Are The Challenges In QR Merchant Acquiring?
In today’s ever-evolving digital economy, merchant acquiring has become a crucial part of how businesses accept payments, whether online or offline.
But while technology is making it easier to process transactions, it’s also creating new challenges for both online and offline merchant acquiring.
1. Merchant Activation: Getting Merchants to Use QR Codes
One of the biggest challenges facing QR merchant acquiring companies is low merchant activation. Sure, QR codes are being deployed at record rates—over 352 million of them! But here’s the catch: many merchants aren’t actively using the QR codes they’ve been given.
Imagine having a QR code ready to accept payments, but it just sits there unused. That’s exactly the issue. In many cases, merchants are onboarded but fail to actively engage with the QR system, which defeats the purpose of having it in the first place.
Payment providers are struggling to ensure that these codes are not just issued but actively used, and that’s a real hurdle for growth.
2. POS Deployment: A Shift Toward Simplicity
While QR codes are gaining traction, traditional Point-of-Sale (POS) systems are facing a slow decline in some markets. In fact, the year-over-year growth in POS deployments has dropped from 28% in FY23 to 14% in FY24. So, what’s behind this shift?
For many merchants, especially smaller businesses, POS systems are starting to feel like more trouble than they’re worth. Setting up a POS machine can be costly, thanks to equipment fees, MDR charges, and ongoing maintenance.
On top of that, POS systems can be more complicated to use compared to the simplicity of a QR code that just needs a smartphone.
3. The Soundbox Solution: Streamlining Payments With Voice
One of the newer trends in offline merchant acquisition is the rise of soundboxes.
These devices, which provide voice confirmations of transactions, are becoming a staple among merchants, especially those in high-traffic locations. So why are soundboxes so popular?
The beauty of a soundbox is its ability to confirm payments instantly—merchants hear a voice confirmation as soon as a transaction goes through.
The adoption of soundboxes is helping businesses ensure smoother and quicker transactions, especially in environments where there’s a high volume of sales.
4. Soft POS: The Future of Offline Payments
Now, here’s something exciting—soft POS is emerging as a major trend in the world of offline payments. Unlike traditional POS systems, which require dedicated hardware, soft POS solutions allow merchants to turn their smartphones or tablets into payment terminals.
This reduces the upfront investment required by businesses and makes accepting payments easier than ever.
By downloading an app, merchants can start accepting real-time payments without the need for bulky or expensive equipment. This is especially appealing to small business owners and startups who may not have the resources to invest in traditional POS machines.
As this trend grows, soft POS is likely to become a cornerstone of how small businesses handle payments, especially in markets where traditional POS systems are seen as cumbersome or expensive.