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July 13, 2020TSG Press

Highlights of the U.S. Merchant Acquiring Landscape Based on Analyzing 325+ of its Top Players

This article is based on one of The Strawhecker Group’s most popular reports; outside of client use, its contents is cited by the media and is the ideal essential desk reference on the U.S. acquiring space.

The Strawhecker Group’s Top 300: Directory of U.S. Merchant Acquirers is a report that details key business statistics on over 325 of the nation’s payment processing players, that collectively process an estimated 90% of all card payment volume in the country.

When looking at the data inside this report, a variety of insights on the country’s payment processing landscape stand out:

  • The top five players processed an estimated $5+ trillion in card volume in 2019. All five of these players have a strong bank sales channel, as they are either bank-owned or have an exceedingly large set of bank partners/clients from other areas of their business.
  • Adyen and Stripe are fast-growing players and are approaching a top 10 ranking based on card volume. Adyen and Stripe are currently ranked 12th and 13th respectively. Both players have been around for less than 15 years.
  • Only four of the players listed are estimated to serve more than one million merchants. Square is estimated to serve 900,000 more merchants than the player with the estimated next highest number of clients, albeit its merchant clients have a smaller than average size.
  • Authorize.Net (a Visa solution), is the payment gateway with the most partnerships among the acquirers listed, partnering with 33% of these players.
  • Six of the top ten players listed were determined to have 10% or more growth in year-over-year card volume, transactions, and/or merchant clients in 2019.
  • 52% of the players listed sell Fiserv’s Clover point of sale products.
  • 33% of the players have more than one sponsor bank relationship.
  • Georgia is the most common headquarter state for the top 25 players.

General Acquiring Market Commentary

The acquiring landscape has seen continued uptick in certain areas, including the independent/integrated software channel, eCommerce, and overall industry consolidation.

eCommerce has continued to be a major growth space for payments players, and the need for in-house solutions or third-party partnerships that allow merchants to seamlessly manage an eCommerce presence is becoming increasingly critical.

Acquirers using software players as a sales channel shows no signs of slowing down. ISVs are increasingly becoming more involved in the payments value chain, taking on larger portions of responsibilities and/or partnering with payment service providers to offer payments to merchant clients. Software is becoming more and more critical for merchant operations, and simultaneously more critical for payments players.

Industry consolidation has been significant among large players, with four of the current top ten players being active in this area, either as a buyer or a seller. Also, 2020 will be the year for one of the largest ownership shifts in merchant acquiring – the separation of Bank of America from Fiserv (formerly First Data). In June 2020, Bank of America and Fiserv’s joint venture came to an end, causing the former structure of the Bank of America Merchant Services entity to slowly dissolve over the next few years as Bank of America will wholly own their payment processing company going forward.

The COVID-19 pandemic has hit home the importance of a vertical-specific strategy, and merchant acquirers will continue to be evaluating target vertical markets, sponsor bank partnerships, and various other risk-related facets of their operation in order to hone their strategy for growth.

Merchant acquirers have been and should be evaluating their eCommerce related offerings during the current COVID-19 pandemic, as the related shift in everyday life has been a catalyst for large growth in eCommerce. Many merchants of various types have pivoted their model to add in, or exclusively sell via online channels; even if they never have before. Salons began selling hair care products online and numerous restaurants launched online ordering for delivery and/or curbside pickup. Payments players need to ensure they have strong knowledge, partnerships, and strategies involving eCommerce to support this growth.

If you have any questions, or if you would like to learn more about this report or related items, please feel free to reach out to The Strawhecker Group’s Market Intelligence team at MI@thestrawgroup.com.

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