Local Acquiring in Emerging Markets: Benefits, Challenges and Real Examples

Are you planning to expand your business into Mexico, Brazil, India or Nigeria? Or perhaps you’re already accepting payments from customers in these markets but struggling with high decline rates and expensive processing fees?

Either way, there’s something worth understanding: where and how you acquire card payments can make a significant difference to your business.

A customer might have enough money in their account, enter their card details correctly and still have their payment declined.

Why?

Sometimes, the problem isn’t the customer or their bank account. It’s how the transaction is being processed.

Let’s explore how local acquiring works, why it matters in emerging markets and what businesses should consider before making the switch.

What is local acquiring?

Whenever a customer pays with a credit or debit card, an acquirer helps the merchant process that transaction.

The acquirer sends an authorization request through the card network, such as Visa or Mastercard, to the customer’s issuing bank.

But what happens when the customer and the merchant are in different countries?

Imagine a German company selling software subscriptions to customers in Mexico.

The German company uses a European acquiring arrangement, so when a Mexican customer pays with their locally issued card, the transaction is processed cross-border.

That introduces additional considerations.

Some Mexican cards aren’t enabled for international purchases. Certain transactions may also carry additional cross-border fees.

Local acquiring offers an alternative.

Instead of processing the Mexican customer’s transaction through a European acquiring arrangement, the merchant uses an acquirer with domestic processing capabilities in Mexico, under an eligible local merchant setup.

The transaction can then benefit from domestic acquiring arrangements.

Sounds straightforward. But is it really?

Local vs cross-border acquiring: What’s the difference?

Let’s compare the two approaches.

Cross-border acquiring: A Brazilian customer purchases a subscription from a European company. The company’s European acquirer submits the authorization through the card network to the customer’s Brazilian bank.

Local acquiring: The company arranges to process eligible Brazilian card payments through a domestic acquiring connection in Brazil.

Why might the second option perform better?

Local acquiring can provide access to domestic card networks, local processing arrangements and market-specific transaction requirements. It can also reduce certain fees and avoid restrictions associated with international transactions.

However, local acquiring doesn’t guarantee that every payment will be approved. Issuers still evaluate fraud risk, available funds and other authorization factors.

Real examples: How businesses are using local acquiring

Mexico: Uber moves payment processing locally

In 2020, Uber began migrating part of its Mexican payment volume from Adyen’s international platform to its local Mexican platform.

According to Adyen’s Uber case study, Uber initially moved approximately 15% of its transaction volume.

Why?

To reduce international processing costs and improve authorization rates.

Uber subsequently reported improvements in payment approvals and significant operational cost savings.

It’s a practical example of a company changing its acquiring infrastructure without necessarily changing what customers experience at checkout.

Nigeria: Microsoft enables local card payments

In November 2020, Microsoft partnered with dLocal to introduce local acquiring for credit and debit cards in Nigeria.

The objective was to make products such as Microsoft 365 more accessible to customers using locally issued cards.

Rather than relying exclusively on international payment processing, Microsoft could support domestic card acceptance through dLocal’s infrastructure.

The announcement didn’t publish a measured authorization-rate improvement, but it illustrates how acquiring arrangements can influence which customers can successfully pay.

India: Cathay Pacific improves authorization rates

India provides another interesting example.

Cathay Pacific worked with Adyen to introduce local payment capabilities as part of its expansion.

According to Adyen’s case study, Cathay Pacific reported a 10% increase in authorization rates in India following the introduction of its local acquiring solution.

The airline also highlighted easier refunds and reduced operational complexity.

These results show why acquiring decisions aren’t solely about transaction fees. They can influence sales, customer experience and operational efficiency.

Beyond cards: Why emerging markets require a different approach

Here’s something merchants shouldn’t overlook.

Local acquiring and local payment methods aren’t the same thing.

Local acquiring concerns how card transactions are processed. Local payment methods include domestic transfer systems, wallets and other ways of paying.

Brazil is a good example.

Customers may use Visa or Mastercard, but they also rely on Elo, card installments and Pix, the country’s instant payment system.

In 2021, Amazon and dLocal expanded their partnership to allow international sellers to access Brazilian customers, including support for local payment options such as credit-card installments.

International sellers could receive their proceeds in USD without independently building the entire local payment infrastructure.

The lesson is that acquiring locally may improve card performance, but merchants also need to understand how customers actually prefer to pay.

What are the challenges of local acquiring?

So why doesn’t every international merchant acquire payments locally?

Because introducing local acquiring creates additional responsibilities.

1. Legal entities and regulatory requirements

Some acquiring arrangements require merchants to establish a local legal entity, open domestic bank accounts or complete additional verification.

Adyen’s account documentation explains why international businesses sometimes establish new entities and merchant accounts for different acquiring regions.

However, a local entity isn’t universally required to accept payments from customers abroad. Some payment providers can support foreign merchants through regulated cross-border collection arrangements.

The applicable rules depend on the market, card network, provider and commercial structure.

2. Foreign exchange and settlement

Imagine collecting payments in Brazilian reais but paying suppliers in euros.

Someone needs to convert those funds.

Your provider might offer foreign-currency settlement, but you still need to understand exchange rates, conversion fees, payout schedules and local restrictions.

A cheaper acquiring fee might lose its advantage if foreign-exchange costs are substantially higher.

3. More complicated payment operations

Operating across multiple acquiring regions can introduce separate merchant accounts, settlement reports, fraud configurations and reconciliation processes.

This becomes particularly challenging when merchants use different providers in different markets.

Working with one international payment platform may simplify integration and reporting, but it doesn’t automatically remove local legal, tax or operational responsibilities.

Is local acquiring worth it for emerging markets?

It depends on transaction volume, the countries involved and the payment methods customers use.

Before making the switch, merchants should compare their current setup with a local acquiring alternative.

I’d focus on five questions:

• How many legitimate payments are being declined?
• What proportion of transactions involve locally issued cards?
• How much do cross-border processing and currency conversion cost?
• Can the provider offer domestic acquiring without establishing another legal entity?
• Will the improvement in completed payments justify the additional operational costs?

One final point: the cheapest transaction isn’t necessarily the most profitable transaction.

A provider charging slightly more but helping customers complete more legitimate purchases may deliver greater value than one offering lower fees but poorer authorization performance.

Local acquiring is therefore more than a technical decision.

For businesses expanding into emerging markets, it can become an important part of their international growth strategy.