Why 40% of future acquiring revenue won’t come from payments

For years, merchant acquiring was the “plumbing” of the payments world: essential, reliable, but frankly, a bit unglamorous. The goal was simple: keep the pipes clear, stop the fraudsters, and don’t let the margins leak.

But the plumbing is getting a massive, AI-powered upgrade.

A new white paper from global payments provider RS2 argues that we are moving past the “defensive” era of AI. We’re no longer just using machine learning to block bad actors; we’re using it to drive frontline revenue and merchant performance.

With global payments revenue projected to hit $3 trillion by 2029, the battle isn’t just about who can process a transaction; it’s about who can extract the most value from the data behind it.

The End of the “False Decline” Tax

One of the most frustrating leaks in the merchant revenue bucket is the false decline when a perfectly legitimate customer is blocked by a rigid, rules-based legacy system.

According to RS2, AI-driven risk scoring is flipping the script. By analyzing behavioral signals and transaction context in milliseconds, these models distinguish between high-risk threats and high-value customers with far greater precision than old-school “if/then” rules.

“In payments, every decline is effectively a decision about revenue,” says Radi El Haj, CEO of RS2.

By shifting from “blocking fraud” to “optimizing approvals,” acquirers are helping merchants capture revenue that previously would have simply vanished at the checkout.

Stopping Churn Before it Happens

In a world where multi-acquiring is now mainstream, merchant loyalty is harder to keep than ever. Usually, by the time an acquirer realizes a merchant is unhappy, the volume has already moved elsewhere.

AI is changing this from a reactive struggle to a proactive strategy. By identifying early warning signals like subtle dips in acceptance rates or volatility in transaction volumes acquirers can intervene with revised pricing or better service before the merchant even thinks about jumping ship.

The Rise of the “AI Control Tower”

The report introduces a compelling concept: the AI Control Tower.

Instead of having separate teams or tools for risk, pricing, and routing, the “control tower” model unifies these functions into a single intelligence layer. This allows for:

• Dynamic Pricing: Moving away from flat fees toward pricing that reflects the real-time risk and value of each merchant.

• Intelligent Routing: Automatically sending transactions through the path most likely to result in an approval at the lowest cost.

• Personalized Value-Added Services (VAS): Using data to tell a merchant exactly which payment methods to promote in specific regions to boost conversion.

Why This Matters for the UK & US Markets

While the report highlights the high-stakes fraud environments of Latin America and the massive data pools in APAC, the implications for the UK and US are clear: Differentiation is no longer about price; it’s about intelligence.

As McKinsey notes, within five years, 40% of acquirer revenues will likely come from activities other than core processing. If you aren’t providing actionable insights, you’re just a commodity and in this market, commodities get squeezed.

The winners of the next decade won’t be the ones with the biggest pipes, but the ones with the smartest brains at the center of them.