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Shift to Electronic Payments
Growth Opportunities for Merchant Processors

  • Publication Date:August 2007
  • Publisher:Koncept Analytics
  • Product Type: Report
  • Pages:25

Shift to Electronic Payments Growth Opportunities for Merchant Processors

There has been a continued strong global transaction growth in both debit and credit card transactions. The continuous move away from cash to electronic mode of payment is creasing significant opportunities for payment processors like First Data, Global Payments and networks like MasterCard and American Express.

Australia's share of retail payments through credit and debit cards is the highest with 51% of overall transactions in the country. Canada, France and United States follows with 47%, 40% and 37% respectively of overall retail transactions with credit and debit cards. Cash-centric international markets like Russia, Japan, China, Germany and Italy holds immense opportunities for merchant processors and card networks as the level of card penetration is also rising in these countries.

The merchant services industry is highly competitive and largely a commoditized industry. The major factors that have increased competitiveness include aggressive pricing by merchants, increased adoption of technologies and ease of switching processors.

Increased competitiveness and aggressive pricing has resulted in negative impact on the margins of merchant processors. Reduced profitability of the industry has resulted in consolidation as players are increasingly looking for gaining economies of scale.
The report is a study on the shift to electronic payments from cash and the implications of this shift from the perspective of merchant processors or acquirers. The supply chain in the processing of credit or debit cards has been studied with a focus on the major entities - card issuer, card association, merchant, merchant acquirer and electronic processor for credit and signature debit transactions. The report analyzes the factors that are driving the growth of paperless transactions. It also assesses the competitiveness of the merchant processing industry and profiles the significant processors.

  • 1. Payments Industry: Move to Paperless
    • This section provides statistics to support the move to paperless form of transaction. Also factors like SEPA have been discussed that is driving growth of electronic payments.
    • 1.1 Growth of Cards Industry
    • 1.2 Factors Driving Growth for Paperless Transactions
  • 2. Card Transaction Process: The Supply Chain
    • An effort has been made to provide an in-depth understanding of the dynamics of an entire transaction process
  • 3. Major Entities in the Card Transaction Process
    • This section highlights all the major entities in an electronic method of transaction
  • 4. Electronic Payment: Growing Share of Debit Cards
    • This section assesses the competitiveness of the card issuers in terms of their market share and purchase transactions
    • 4.1 Shift from Credit Cards to Debit Cards
    • 4.2 Global Card Networks: Competitive Landscape
  • 5. Merchant Processing Industry
    • The section analyzes the principal competitive factors in the payment processing industry and the sales channels adopted by merchant processors
    • 5.1 Structure of merchant processing industry
    • 5.2 Merchant Processing: Competitive Factors
    • 5.3 Merchant Processors' Sales Channels: Direct and Indirect
  • 6. Merchant Processing: Competitive Landscape
    • Profiles of merchant processors, their strategies to compete effectively and their performance in the processing industry has been analyzed in this section
    • 6.1 First Data
      • Company Profile
      • Performance of Merchant Processing Services
    • 6.2 NOVA Information Systems (U.S. Bancorp)
      • Company Profile
      • Performance of Merchant Processing Services segment
    • 6.3 Fifth-Third Bank
      • Company Profile
      • Performance of Processing Solutions Segment
    • 6.4 Global Payments
      • Company Profile
      • Performance of Merchant Services Segment
  • 7. Future Opportunities for Merchant Processors
  • Figures and Tables
    • Figures
    • Figure 1.1: Global Purchase Transactions on Credit and Debit Cards by Region
    • Figure 1.2: US Market Share of Paper and Cards: 2000-2005
    • Figure 4.1: Global card purchasing volume and total dollar volume
    • Figure 4.2: Payments through debit cards and credit cards: 2001-2005
    • Figure 4.3: Market share of Card issuers in the overall purchase volume (2006)
    • Figure 4.4: Growth of purchase volume transactions for major cards (2005 vs. 2006)
    • Figure 4.5: Purchase transactions through debit cards: Visa vs. MasterCard
    • Figure 5.1: Top US Bank Card Acquirers/Merchant Processors
    • Figure 5.2: U.S. Bancorp's sales by business segment
    • Figure 5.3: Fifth Third's sales by business segment
    • Figure 5.4: Global Payment's sales by business segment
    • Figure 7.1: Forecast of global purchase volume through debit and credit cards: 2006-2011
    • Figure 7.2: Share of retail payments through cards and cash - Global markets
    • Table 5.1: Merchant Processors: Outlets and Average Transaction
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