- This is a preview ofThe Payments Ecosystemresearch report from Business Insider Intelligence.
- Purchase this report.
- Business Insider Intelligence offers even more consumer coverage with Payments & Commerce Pro. Subscribe today to receive industry-changing payments and commerce news and analysis to your inbox.
Credit card processing companies will continue to be a key driver in the payments ecosystem, with credit card payments set to remain the largest in-store payment type by volume – forecasted to reach $1.82 trillion in annual volume by 2024.
Credit Card Processing Industry Overview
Whenever consumers tap or swipe their credit card, payment data is sent through a complex web of stakeholders that help complete the transaction – and credit card processors are responsible for carefully and securely transmitting this data.
Francois Nel/Getty Images
There are two types of credit card processors:
- Front-end processors:Make sure customers’ funds are sufficient for a transaction by routing transactions from merchants to the cardholder’s bank to gain authorization
- Back-end processors:Accept settlements from front-end processors and move the money to the merchants’ issuing bank
Major card processing companies
Business Insider Intelligence has compiled a list of the top credit card processing companies in 2020. We’ve highlighted four of those companies below:
TSYS, or Total System Services, is the third-biggest payment processor in the US credit card issuer market. It provides services to over 3.5 million small and medium sized business (SMB) merchant locations and more than 1,300 financial institutions (FIs) across more than 100 countries. In 2019 the processing company was acquired by Global Payments for $21.5 billion, and the two companies expect at least $300 million of annual run-rate cost synergies.
Fiserv provides FIs with services including payments and risk and compliance in over 100 countries. In 2019 Fiserv acquired First Data for $22 billion and the combined entity expects $500 million in revenue synergies over a five-year period.
Elavon claims to be the fourth-largest merchant acquirer in Europe — and it’s the seventh-largest in the US. The payment solution provider is a subsidiary of US Bancorp and offers features like processing online and in-store payments. In 2019 Elavon acquired payments gateway Sage Pay to help grow its market share in the UK and Ireland.
Adyen is a full-stack gateway, providing e-commerce companies with a payment platform that includes gateway, risk management, and front-end processing services. In 2019 Adyen announced the launch of Adyen Issuing – a product that builds onto in-store and online processing and gateway functionality.
To read the full list of credit card processing companies, click here.
Credit Card Industry Trends
Looking ahead, there are two clear trends that will evolve within the credit card industry: rewards and mobile payment technology.
Seventy-five percent of consumers have a rewards program attached to their most preferred credit card. According to a Business Insider Intelligence survey, three of the top four factors cited as the most important in choosing a primary card were related to rewards. Notably, among millennial respondents, all three top features were related to rewards.
Business Insider Intelligence highlights three reward trends we can expect in the coming years:
- Flexible rewards (the ability of consumers to choose what kinds of rewards they receive)
- Bonus rewards for e-commerce
- Bonus rewards for shopping locally
Additionally, the rise of mobile payments and the successful launch of Apple Card will massively shake up the way consumers use credit cards.
Following the 2019 launch of the Apple Card, Apple CEO Tim Cook announced that Apple Pay’s transaction volume and revenue more than doubled on an annual basis. He also compared Apple Pay’s volume growth to that of PayPal’s, noting that Apple Pay is growing four times faster.
A lot of Apple Card’s success can be tied to its cash back offerings – users receive 2% cash back on all purchases via the mobile wallet and 3% back on Apple Pay transactions with select merchants.
And the early success of Apple Card will likely accelerate consumer demand for more digital and mobile payment solutions.
The rise of Gen Z and millennial consumers is forcing merchants to adopt mobile point-of-sale (mPOS) solutions, which accept mobile wallets, contactless payments, and other digtial-native products that catch the eyes of these younger, tech-savvy generations. For example, over half of Gen Zers use digital wallets at least once a month for purchasing and about 75% use a digital payment app.
Business Insider Intelligence
And as this cohort’s buying power continues to grow, Business Insider Intelligence expects there to be 16.6 million mPOS terminals in the US by 2024, and mobile in-store payments are projected to drive forward at a 23.9% compound annual growth rate (CAGR) to hit $262.6 billion by 2024.
From mobile wallets to retail apps, younger consumers are looking to make purchases in the most efficient and convenient way possible, and payment processing firms are responding to their demands.
In fact, Business Insider Intelligence recently reported that Fiserv, Samsung, and Visa partnered to create a mPOS solution that successfully accepts a PIN-based contactless transaction on a mobile device. The solution allows merchants to accept contactless transactions on a mobile device without additional hardware.
More to Learn
Credit card processing is just one piece of the larger payments ecosystem – that’s why Business Insider Intelligence has put together thePayments Ecosystemresearch report. The report traces the path of an in-store card payment from processing to settlement across key stakeholders. It examines the payments ecosystem today, its growth drivers, and where the industry is headed.
Interested in getting the full report? Here’s how to get access:
- Purchase & download the full report from our research store.>> Purchase & Download Now
- Sign up for Payments & Commerce Pro, Business Insider Intelligence’s expert product suite keeping you up-to-date on the people, technologies, trends, and companies shaping the future of consumerism, delivered to your inbox 6x a week.>>Get Started
- Check to see if you already have access to Business Insider Intelligence through your company, or inquire about access if you don’t.>>Check If You Have Enterprise Access
- Current subscribers can read the reporthere.