Nearly a third of acquirers surveyed still view mobile payments as a threat.

Thirty-two percent of the executives surveyed for a recent report by Aite Group said mobile payments represent a "great risk," though many more see it the other way, with 64% calling mobile pay "a great opportunity."

"Merchant acquirers understand how uncertain the industry is now in regards to mobile payments, but at the same time they intend to be aggressive in obtaining the technology," says Richard Oglesby, senior analyst and mobile pay expert with Boston-based Aite Group.

"Doing nothing is not an option," Oglesby says. He authored the report, "Merchant Acquiring: Full Speed Ahead Into the Mobile Payments Era."

Aite surveyed 25 executives from merchant acquiring organizations, independent sales organizations and payments technology vendors for the report, compiled in partnership with the Electronic Transaction Association. It conducted its survey from May through July.

Survey respondents cited rapid technological change, card brand and regulatory change and competitive pressures as the top three challenges facing merchant acquirers over the next two years.

And change is indeed occurring rapidly.

Not one respondent mentioned Square Inc.'s mobile wallet in the survey — and until last week it was one of Square's least prominent offerings. But the recent news that Starbucks would use Square's digital wallet technology and invest $25 million in the mobile-payments company illustrates just how quickly things change.

Oglesby acknowledges if the survey were taken this week, Square may gain far more consideration.

Conversely, Square was at the top of the list when respondents were asked which ISOs, acquirers or technology providers they were most impressed with in 2011/2012.

Acquirers identified Square's ability to innovate and open new markets for merchant acquiring.

Acquirers can adapt by focusing on increasing their investments in the flexibility of the technology at the merchant's point of sale, Oglesby says.

"Legacy systems are not designed for maximum flexibility and acquirers need to make the investment in their systems so they are able to handle a lot of different payments in the future," Oglesby says.

Some acquirers may be reluctant to make such investments because of an industry mantra that says, "legacy systems make money, new systems don't make money," Oglesby says.

But they need to get systems with new services "in front of legacy systems" and then leverage the legacy system to do payments, he adds.

In the past, those in the industry have generally viewed payment gateways as flexible, but that perspective now is also needed at the POS in preparing for mobile and cloud-based payments, Oglesby notes.

From a competitive standpoint, respondents indicated a fear of losing customers to entrants in mobile payments that offer competing new technologies, the report stated.

Yet, respondents indicated "a great respect" for companies that develop products that create a value beyond a payment mechanism for consumers because those companies will ultimately stand out.

Respondents chose Isis, the mobile commerce joint venture of American telecommunications companies, as the digital wallet developer they would most likely recommend to their merchants. Google Wallet, Visa Inc.'s and PayPal Inc. rounded out the top four choices.

Clearly, acquirers do not like bogging down merchants with new fees.

As a result of the Durbin amendment to Dodd-Frank, fee caps on debit transactions, acquirers now also feel the burden of having to collect on fee assessments levied by the payment networks, the report states. A majority of respondents, at 76%, disagree that new network fees "are a welcome change" to the pricing structure. Only 16% were comfortable with the fee assessments, the report adds.

Data security and fraud prevention remain key concerns for merchant acquirers, as they understand a data breach represents a potential catastrophe. Nearly half of the respondents said merchant acquiring will witness more major security breaches in the next two years.

However, as Heartland Payment Systems has shown, companies can survive a breach by promoting the use of new data security software and hardware that goes beyond Payment Card Industry data security standard compliance, the report stated.

In the U.S., security measures will receive a boost with the adoption of the EMV smart card standards, which all major card brands are promoting.

"The EMV mandates are really a mandate to prepare for Near Field Communication technology and chip-card acceptance," Oglesby says.

"EMV is not going to go away, because plastic cards are not going away," he adds.

But that doesn't stop the potential uncertainty for merchant acquirers.

"If NFC is not making progress soon, other technologies may move past it," Oglesby says.

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