Payments growth has a hidden ceiling. It isn't technology. It's balance-sheet capacity: the capital an acquirer must hold against every merchant that could fail. How the ceiling works, what it has already cost the public acquirers, and how it can be solved.
Roughly eight trillion dollars moves through online payment acquirers every year, and most of it clears without incident. The danger sits with merchants who are paid now and deliver later: airlines, cruise lines, events, ticketing platforms, travel marketplaces. A customer pays today for a flight, a sailing, or a show that is weeks or months away. If that merchant fails before delivering, the customers are still owed their money, and under the prevailing rules the acquirer is the one who refunds them.
This is not hypothetical. When a tour operator or airline collapses, its card acquirer can be left refunding cardholders for trips that never happen. Reports estimate acquirers were holding around £50M of Thomas Cook's customer money when it failed in 2019, and still faced a refund bill running into the hundreds of millions.
There is no escape hatch. Once the merchant is gone, the acquirer is the last link between the customer and their money. So it protects itself the only way the model allows. It imposes strict credit terms: it holds cash in reserve, delays settlement, and caps how much volume the merchant can run.
Reserves are the part you can count. We estimate $50B+ held in US merchant reserves and $200B+ worldwide. The acquirer can't treat it as deployable capital, and the merchant can't put it into growth, hiring, inventory, or product. Both are solvent, and the money sits still.
Both are right, and neither can move. Ninety percent of high-value negotiations between a merchant and its acquirer came down to the fees and the reserve.
To a fast-growing merchant, the reserve is a constant source of pressure. They watch millions sit idle on the acquirer's balance sheet and feel it as lost campaigns, delayed hires, and stalled expansion. So every business review and every renewal circles back to one question: when do we get our cash back?
Merchants negotiate hard on release schedules, thresholds, and triggers, and when they don't like the answer, they quietly shop the market. In competitive segments the deal often turns on one thing: who will hold the least cash, for the least time. The acquirer that eases the pressure wins the account; the one that can't is left explaining why its model "won't allow" what the merchant already knows it can get elsewhere.
In the most extreme cases the number is not 10%. During the 2020 travel shock, some acquirers held back up to 100% of an airline's card revenue until wheels-up, the moment a flight actually departs. Norwegian Air's former chief executive estimated the airline was short £350–400 million of liquidity it would otherwise have held, purely because of acquirer holdbacks.
Product is comparable across providers, and price is competed away by the market. That leaves one leg of the relationship still able to move, which is why every hard negotiation ends up in the same place.
Product is comparable across providers and price is competed away. Cash access is the one leg of the relationship that still moves, which is exactly why every hard negotiation ends up there.
From the acquirer's seat, cash collateral works. It is simple to explain, easy to implement, and it covers the worst case: if the merchant fails and refunds flood in, there is a pool of cash on hand. From the merchant's seat, the same mechanism is increasingly intolerable. The ask usually sounds like a rolling reserve of 5% to 10% of processing volume, held for six months and released only on a rolling schedule.
For a high-growth business, that 10% is not an accounting detail. It is the next campaign, a new country launch, peak-season inventory, and the hiring plan. The fastest-growing accounts feel it first and shop for an acquirer who keeps less of their cash. To hold the same risk down, acquirers also reach for bigger reserves, delayed settlement, and volume caps. Every lever tightens the same screw.
The most revealing behavior shows up around a strategic account, a major travel platform or a ticketing marketplace that has become too important to lose. Losing it would dent revenue and the story told to investors. So the acquirer does the one thing a thin-margin business should fear most. It steps into the gap with its own capital.
On the surface it looks generous: looser reserves, faster settlement, merchant-friendly terms. Underneath, the downside has moved onto the acquirer's own balance sheet. It never appears in a product deck. It lives in side letters, board packets, and the fine print of individual contracts, a fragile layer of implicit promises that a single insolvency in the wrong place can call due.
This is not a theoretical risk. When Monarch Airlines failed in 2017, its card acquirer absorbed such a wave of refunds that it had to be recapitalized. When Thomas Cook collapsed two years later, acquirers again faced hundreds of millions in cardholder refunds. The exposure an acquirer quietly takes on to win an account is the exposure that comes due when the account fails.
That reserve is dead capital: it earns nothing and funds nothing. The cost falls on three parties.
The acquirer holds part of the merchant's money as a reserve. That cash can't pay for marketing, hiring, or inventory. The faster the merchant grows, the more gets held back.
The acquirer's own money is locked in reserves, earning nothing. It turns away merchants it can't cover, and risks its own balance sheet to keep the ones it wants.
The money that could fund the fastest-growing merchants sits idle. So the whole market grows more slowly than it should.
There is no purpose-built capital product for merchant insolvency in digital payments.
This is a growth problem, treated like a risk problem.
Strip the logos and the growth plans are identical. Every acquirer is shipping the same handful of things, and the work is real. But it is about keeping the merchants they have, not reaching the ones they can't.
Behind every yes and every no is capacity: the risk capital an acquirer can put behind its merchants. It decides which merchants they can take, how much volume they can hold, and how much risk they can run. When an acquirer needs more of it, it reaches for the balance sheet. Five moves, all rational, all slow or costly, and every one loads more of the acquirer's own credit risk onto its own book.
Buy another firm's balance sheet.
Stockpile your own capacity.
Buy capacity from investors.
Rent capacity, short-term.
Borrow a sponsor's balance sheet.
So the whole industry is chasing the same thing, capacity, down the same handful of expensive roads, each one piling more of its own risk onto its own book. There is a better way to get capacity. It doesn't sit on your balance sheet at all.
Konfyd Capital creates a new growth lever for payment acquirers. We release the merchant volume and processing revenue that credit-risk constraints have been holding back.
Konfyd takes on the part of the business acquirers have to manage but should not specialize in, so they can double down on what they are actually great at.
Every acquirer has turned away high-value merchants because of credit-risk exposure. Konfyd eliminates that exposure, so you can onboard new merchants that were previously out of reach.
When acquirers offer poor credit terms, merchants send their volume elsewhere. Konfyd lets you offer better terms, and capture more volume from the merchants you already have.
In a commoditized market where fees race to the bottom, Konfyd turns credit-risk friction into a new source of margin instead of a cost.
Konfyd moves every lever in the same direction at once.
The top line grows while the capital base shrinks. That is compounding growth, without warehousing the risk.
The next winners won't warehouse insolvency risk to grow. They'll take the inefficiency out of capacity itself, and grow on capital they don't have to hold.
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