TSG Press

Home / Resource Center / TSG Press
Jun 2016

Now Available: Subscription/Recurring Market Analysis & Directory

TSG's new market analysis of independent software providers (ISVs) contains a detailed look on the subscription/recurring revenue industry. This includes a high-level analysis on the market, merchant acquiring performance metrics, and a directory of 34 ISVs.

Did you know that you should be penetrating this market?

  • There were more than twice as many card-accepting merchants within the Continuity/Subscription market (MCC 5968) in 2015 compared to 2014
  • Based on the Forbes Top 2000, an estimated 35% of the companies generate revenue via a subscription model

Learn more.

Jun 2016

TSG in Digital Transactions: Harbortouch Swaps Private-Equity Partners in Deal Valued at $500 Million-Plus

Analyst Jared Drieling, business-intelligence manager at The Strawhecker Group, an Omaha, Neb.-based payments consultancy, suggests Harbortouch could one day offer an expanded line of so-called smart POS terminals, which run on apps that include payments but also a wide range of other business-management functions.

“Smart terminals are a hot item for ISOs to go out and sell,” Drieling tells Digital Transactions News. “This [new investment] is an opportunity to grow and take market share away from the smart-terminal players in the market. It’s a window of opportunity for Harbortouch, which is why it’s seeing increased interest from investment companies. [For acquirers], it’s all about adding value-added relationships to create that sticky relationship. If you can provide a smart terminal with value-added services, that becomes pretty sticky [and attractive to investors].”

Continue reading.

May 2016

TSG in WSJ: More Chip-Card Headaches, This Time for Merchants

A few weeks ago, a woman used a counterfeit card to buy $400 worth of gift cards at a Harps grocery store—and then hit nine more stores in quick succession after the first attempt worked, sticking the regional grocer with a tab for $4,000 that previously would have been absorbed by the card-issuing bank.

“We’ve seen a significant uptick,” says Mike Thurow, vice president of store systems for Harps Food Stores, referring to counterfeit-card costs. The chain, which operates 80 stores in Arkansas, Oklahoma, Missouri and Kansas, aims to start processing chip transactions within the next couple of months.

Chargebacks among small and medium-size merchants rose 15% in the fourth quarter from a year earlier, according to a recent survey by The Strawhecker Group, a payments consulting firm. The industry believes the volume of chargebacks has likely risen since then, because the fourth quarter included only a few weeks under the new rules and it often takes a while for the costs to flow through to merchants.

Continue reading

May 2016

TSG in Digital Transactions: Wall Street Punishes Square Despite the Merchant Processor’s Transaction Growth

It in its earnings report, Square said the low sequential quarterly growth was “largely due to the delayed signing of two new investors, which was a result of more challenging credit market conditions.”

Square thus finds itself exposed to the vagaries of the credit markets while delving further in the highly competitive small-business loan industry. Big players in the business include American Express Co., PayPal Holdings Inc., CAN Capital Inc., On Deck Capital Inc. and Kabbage Inc. The newest entrant is Shopify Inc., an Ottawa, Ontario-based e-commerce platform and merchant processor.

But there are dozens more. Jared Drieling, business intelligence manager at The Strawhecker Group, an Omaha, Neb.-based merchant-acquiring consultancy, keeps a list the players in the merchant-lending niche.

“There are a good 25 that have loan volumes of $20 million or more a year,” Drieling tells Digital Transactions News, adding that there are more providers below that threshold.

Continue reading

May 2016

TSG in Digital Transactions: Jumbo Acquirer Pricing Advantage Dissipating

Pricing advantages once held by super-large acquirers—those whose merchants process more than 3 million monthly credit and debit transactions—appear to have retreated, according to the Merchant Processing Pricing Benchmark Study recently issued by The Strawhecker Group.

These jumbo acquirers had, on average, the lowest amounts for their processing and authorization fees says Robert Schmitz, senior associate at the Omaha, Neb.-based payments consultancy. The Strawhecker report did not include the actual pricing averages for the jumbo or smaller groups of acquirers, defined as small for those with up to 250,000 in monthly transactions; medium, 250,001 to 1 million; and large, between 1,000,001 and 3 million.

Continue reading.

Check out the eReport.

May 2016

TSG in Yahoo! Finance - Those Chip Cards Have a Long Way to Go

Statistics cited by card companies paint an optimistic picture of chip adoption since the Oct. 1 “liability shift” that held merchants liable for counterfeit-card transactions if they hadn’t updated their terminals for EMV.

A recent Visa (V) infographic, for instance, boasts that with 265 million Visa chip cards in circulation, the U.S. leads every other country, and that the volume of chip payments soared to $18.4 billion in March.

Problem is, Visa’s total U.S. payment volume in the three months ending March 31 was $823 billion. Visa doesn’t break down that total on a shorter timeframe, but the math is bad for EMV (named after the “Europay, MasterCard and Visa” parents of this system) in any plausible division of it.

In the same way, boasts about how many U.S. stores take “EMV” cards, like last month’s report by MasterCard (MA) of chip-compatible locations increasing by 121% to 1.2 million, understate the work remaining. A mid-February survey by the Strawhecker Group, a payments-focused consulting firm, found that only 37% of U.S. merchant locations were ready for EMV.

Continue reading

May 2016

Now Available - The U.S. Merchant Category Encyclopedia

Today, TSG is releasing another new eReport – The U.S. Merchant Category Encyclopedia! Focused on 37 major U.S. merchant categories, the report serves as a directory in understanding the dynamics of each category, the payments players that focus on each category, and an analysis on the attractiveness of the category from an industry and acquiring perspective.

The first half of the report is a briefing on the U.S. macroeconomic landscape which identifies key government economic indicators and the implications for merchants through 2016. This part of the report also provides a snapshot of the concentration makeup of the U.S. merchant landscape and breaks down U.S. merchant categories by region, industry type and merchant size.

The latter half of the report identifies 37 major U.S. merchant NAICS categories and provides detailed information on each category such as dollar volume growth, transaction growth, market share by payment tool, growth in establishments, sales per establishment, establishment concentration, by state, sales concentration by state, total industry sales estimate, producer price index, employment and a look at the top payments players that focus on that specific merchant category. Each category receives an industry attractiveness ranking and an acquiring attractiveness ranking.

Learn more.

May 2016

Now Available - Merchant Processing Pricing Benchmark Study - 8th Edition

The Strawhecker Group recently surveyed the merchant acquiring industry to determine the prevailing line item pricing rates for the cost of third-party processing in the U.S. market.  The study included merchant acquirers who use third-party providers for front-end authorization and back-end settlement services.

In total, information was gathered from 83 front-end authorization portfolios and 78 back-end settlement relationships. The chart that follows shows the distribution of data across the volume bands, along with the aggregate monthly transactions for each category.

Learn more

Apr 2016

TSG In Huffington Post - Slow EMV Credit Card Payments Could Get Faster

Most of the new EMV card readers are also designed to accept mobile wallets, such as Apple Pay, Samsung Pay and, my personal preference, Android Pay. These payment methods are speedier than card-based EMV payments and just as secure.

They are slowly becoming mainstream: About 28% of smartphone owners surveyed said they had used mobile payments in the 12 months prior to the survey, according to a 2015 study from the Federal Reserve. Digital marketing firm eMarketer projected the value of mobile payment transactions to increase by 210% in 2016.

“There’s somewhat of a perfect storm brewing,” says Jared Drieling, a manager at The Strawhecker Group. “I think with the EMV process of having a consumer insert or dip that card, and the whole process taking a little longer, it essentially lowers the bar now for mobile wallets to take off.”

Continue reading

Apr 2016

TRANSACT 16 Special Report: U.S. Economic Indicators

The Electronic Transactions Association, in partnership with The Strawhecker Group, is pleased to release this special report on the U.S. economy, focused within the context of the electronic payments ecosystem. This report is a member benefit provided to the ETA's 500+ worldwide member companies.

ETA Member Login
Please login and navigate to 'Member-Only Content' to download Economic Indicators. Forgot your password? Click here.

Report Highlights:

  • The electronic payments industry is strong:
    • U.S. consumer spending via electronic payments methods continues to be very strong at a 9% CAGR, driven by organic growth of the economy as well as consumer usage and merchant acceptance of credit and debit cards
    • Payments companies continually outperform ‘the market’ with a 22% CAGR versus 8.7% for the S&P 500  
  • The electronic payments industry is attractive:
    • Nearly $100 billion was invested into the payments ecosystem globally in 2015; certain payments sub-categories are receiving more attention from investors than others including mobile payments, eCommerce, and security & data analytics
    • The payments industry is a highly active M&A marketplace, especially for merchant acquiring companies, with the average net revenue multiple being 3.9 times annual net revenue. However, the data also shows that multiples drastically vary based on company characteristics.