The North American Market for Third Party Payment, Payroll, and Healthcare Transaction Processing

• Scope and Methodology
  • Market Definition
  • Report Methodology
  
  
• The Overall Market
  • Payment TPP the Largest and Fastest Growth Segment
  • Figure 1-1: North American Market for Third Party Processing, 2002-2011 (in billions of dollars)
  • Figure 1-2: Share of North American Market for Third Party Processing: By Segment, 2002, 2006, 2011 (percent)
  • Established Giants Enjoy a Distinct Advantage
  • Looking Ahead
  
  
• Payment Processing
  • The Basics of Payment Processing
  • Market Overview
  • Competitive Overview
  • Looking Ahead
  
  
• Payroll Processing
  • The Basics of Payroll Processing
  • Market Overview
  • Competitive Overview
  • Looking Ahead
  
  
• Healthcare Transaction Processing
  • The Basics of Healthcare Transaction Processing
  • Market Overview
  • Competitive Overview
  • Looking Ahead

Chapter 2: Payment Processing

• Introduction
  • The Basics of Payment Processing
  • The Appeal of Non-Cash Transactions
  • Processing Card Transactions Is Primary Payment TPP Function
  • Numerous Options and Networks Comprise Payment TPP Universe
  • Debit Transaction Processing
  • Several Businesses Involved in Each Commercial Transaction
  • Following The Money: Process Flow in Card Transactions
  • Settlement Between Users and Issuers
  • Transaction Fees Are Revenue Core for Payment TPPs
  • Figure 2-1: North American Payment Third Party Processing Revenues, 2002-2011 (in billions of dollars)
  
  
• Market Trends
  • Strong and Steady Growth for Payment TPP
  • Table 2-1: North American Market for Payment Third Party Processing, 2002-2006 (in billions of dollars)
  • Healthy Growth in Transaction Volume
  • Table 2-2: North American Payment Processing Transaction Volume, 2002-2006 (in billions of dollars)
  • Figure 2-2: Number of Payment Transactions, 2003, 2005, 2007
  • Debit Cards Are Biggest Driver of Business Growth
  • Shift Away from Credit Cards to Debit Cards
  • Debit Outpacing Credit Across the Board
  • Table 2-3: Consumer Reasons for Debit Card Use/Non-Use, 2006 (percent)
  • Debit Card Demographics: Youth Skew Implies At Least Some Uncertainty
  • Table 2-4: Demographic Characteristics of Users of Debit Cards (percent)
  • Gift Cards Are Fastest Growing Segment of Card Market
  • Online Banking: Analysis
  • Online Banking Now Used by More Than Half of Households
  • Figure 2-3: Growth of Online Banking: 1994-2006 (percent of U.S. households)
  • In-Person Banking Still Important to Consumers
  • Person-to-Person E-commerce: Analysis
  • PayPal Setting the Standard as Online TPP Prototype
  • Concerns About Economy Affect Consumer Spending Levels
  • Projected Market Growth
  • Table 2-5: Projected North American Payment Third Party Processing Revenues: 2006-2011 (in billions of dollars)
  
  
• Competitive Overview
  • Competitive Landscape
  • Table 2-6: Leading Payment Third Party Processors
  • Future Growth of Payment TPPs Depends on Network Size
  
  
• Competitor Profile: First Data Corp.
  • Still the Industry Leader Despite Major Revenue Loss
  • Table 2-7: First Data Corp. Financial Performance, 2004-2006 (in millions of U.S. dollars)
  • Too Many Acquisitions, Too Little Technology
  • A Return to Core TPP Businesses
  • First Data Gets Taken Over
  • Rebuilding and Restoring Customer Trust
  
  
• Competitor Profile: Fiserv, Inc.
  • The Largest Nonbank Check Processor
  • Table 2-8: Fiserv, Inc. Financial Performance, 2004-2006 (in millions of U.S. dollars)
  • Four Primary Business Areas
  • Unique Product Offerings
  • Acquisition and Cross-Pollination Infuse Growth Strategy
  
  
• Competitor Profile: Alliance Data Systems (ADS)
  • Successful Branding Programs in the U.S. and Canada
  • Table 2-9: Alliance Data Systems Financial Performance, 2004-2006 (in millions of U.S. dollars)
  • Canada’s Pre-eminent Loyalty Program
  • Faster Transactions and Data Capture at the Pump
  • New Clients and Strong Programs Point Towards Double-Digit Growth
  
  
• Competitor Briefs
  • Fidelity National Information Services, Inc.
  • Table 2-10: Fidelity National Information Services, Inc. Financial Performance, 2004-2006 (in millions of U.S. dollars)
  • Total System Services, Inc.
  • Table 2-11: Total System Services, Inc. Financial Performance, 2004-2006 (in millions of U.S. dollars)
  • Metavante Corporation
  • Global Payments, Inc.
  • Table 2-12: Global Payments, Inc. Financial Performance, 2004-2006 (in millions of U.S. dollars)
  • EFD (eFunds Corporation)
  • Table 2-13: EFD (eFunds Corporation) Financial Performance, 2004-2006 (in millions of U.S. dollars)
  
  
• Marketing and Service Trends
  • Market Directed by Consumer Preferences
  • Consumers Eliminate Paper, Increase Security with Debit Cards
  • Table 2-14: Transactions Handled by Major Networks, 2006 (percent)
  • New Entrants into Debit Card Market
  • Need for Real-Time Processing Favors TPPs
  • Prepaid Gift Cards a High-Interest Area
  • Segment Growth Expected to Be Very Strong
  • Converting Coins to Cards
  • Hidden Card Fees Draw Government Scrutiny
  • The Future of Check 21
  
  
• Looking Ahead
  • Industry Shifts Affect Competitive Outlook
  • Businesses Must Still Rely on Infrastructure
  • Consumers Will Gravitate Towards Faster, Easier-To-Use Payments
  • Contactless Payments Speed Up Transactions
  • Table 2-15: Number of Oil Cards in Use: 2004 vs. 2005
  • The Role of American Express, Visa, and MasterCard
  • The EMV Alternative
  • The EMV/Contactless Hybrid as an Industry Compromise
  • The Wal-Mart Effect
  • More Payments Via Mobile Phone in the Future
  • Obopay Takes PayPal Model Mobile
  • Millions of Mobile Phones = Millions of Transactions
  • North America Playing Catch-Up
  • Declining Usage of Coins

Chapter 3: Payroll Processing

• Introduction
  • The Basics of Payroll Processing
  • Core Payroll TPP Services
  • The Rationale for Payroll Outsourcing
  • Effective Payroll Outsourcing
  • Drawbacks to Payroll Outsourcing
  • Figure 3-1: North American Market for Payroll Third Party Processing, 2002-2011 (in billions of dollars)
  
  
• Market Trends
  • Steady Growth for Payroll TPP
  • Table 3-1: North American Market for Payroll Third Party Processing, 2002-2006 (in billions of dollars)
  • Online Players Expand Market by Targeting Smaller Firms
  • Potential Client Base Over 5 Million Strong
  • Table 3-2: Number of Firms, Establishments, Employees, and Annual Payroll of U.S. Employer Firms, 2004
  • Market Penetration Still Less Than 50% of Potential Market
  • Table 3-3: How Businesses Process Stages of Payroll (percent)
  • Figure 3-2: Payroll Processing By Practice (percent)
  • Positive Employment Trends
  • Table 3-4: Estimates of Total Nonfarm Private Employment, March 2006-March 2007
  • ADP National Employment Report Also Paints Positive Picture
  • Growth Expected to Come from New Clients
  • Small Business Health Another Key Barometer
  • Growth of Payroll TPP Organizations
  • Projected Market Growth
  • Table 3-5: Projected North American Payroll Third Party Processing Revenues, 2006-2011 (in billions of dollars)
  
  
• Competitive Overview
  • Census Definition of “Payroll Services” Not All-Inclusive
  • More Than 4,000 Payroll Establishments of Varying Size
  • Employment Size in Payroll TPPs
  • Table 3-6: Payroll Services Enterprises: By Employment Size, 2004 (number)
  • The Market Leaders
  • Table 3-7: Leading Payroll Third Party Processors, 2007 (in millions of dollars)
  • Other TPPs in the Payroll Space
  • The Role of Business Process Outsourcers (BPOs) and Human Resources Outsourcers (HROs)
  • The Role of Application Service Outsourcers (ASOs)
  • The Rise of Professional Employer Organizations (PEOs)
  
  
• Competitor Profile: Automatic Data Processing, Inc. (ADP)
  • The World’s Largest Payroll/Tax Filing Processor
  • Table 3-8: ADP Financial Performance, 2004-2006 (in millions of U.S. dollars)
  • Renewed Focus on Payroll
  • Expansion and Divestiture
  • Revised Revenue Perspective
  • Adjacent Markets and New Business
  
  
• Competitor Profile: Paychex
  • Building a Big Business on Small Business
  • Table 3-9: Paychex Financial Performance, 2004-2006 (in millions of U.S. dollars)
  • Payroll Is Key to Paychex’s Success
  • Opportunities Beyond Payroll
  • Internal and Organic Growth Define Paychex
  
  
• Competitor Profile: Ceridian
  • Payroll Is Just the Beginning
  • Table 3-10: Ceridian Financial Performance, 2004-2006 (in millions of U.S. dollars)
  • Two Business Units: HRS and Comdata
  • Ceridian Eyes Convergence of Payroll and Payment
  • Moving Past Payroll?
  
  
• Marketing and Service Trends
  • Scope of Payroll Processing Expanding
  • Online Growth
  • SurePayroll Exclusively Online-Based
  • Ultimate Software and UltiPro
  • “Branded Payroll” Appeals to Accountants
  • Accountants as TPPs
  • CompuPay Hones in on CPAs
  • Interest in Payroll Cards
  • Fee Variations
  • Growth Areas
  • An Attractive Climate for PEOs
  
  
• Looking Ahead
  • Deploying Technology and Allocating Resources
  • Big Opportunities in Small Business
  • Branding Options at the Small Business Level
  • More Companies Vying for Business
  • Table 3-11: Projected Number of U.S. Companies Providing Payroll Processing Services: 2002-2010
  • The Effect of Foreign Outsourcing
  • Evolving Payroll Methods

Chapter 4: Healthcare Transaction Processing

• Introduction
  • The Basics of Healthcare Transaction Processing
  • Core Healthcare Transaction TPP Services
  • The Health Insurance Portability and Accountability Act
  • Figure 4-1: North American Market for Healthcare Transaction Third Party Processing, 2002-2011 (in billions of dollars)
  
  
• Market Trends
  • Healthcare Transaction TPP Still an Emerging Market
  • Table 4-1: North American Market for Healthcare Transaction Third Party Processing, 2002-2006 (in billions of dollars)
  • Increasing Costs a Major Concern in Healthcare Business
  • Healthcare Payers Turn to TPPs for Cost Efficiencies
  • Electronic Processing of Clinical Transactions in Early Stage
  • Increased Use of Information Technology for Clinical Purposes
  • Reimbursement Cycle Increasingly Automated
  • Projected Market Growth
  • Table 4-2: Projected Healthcare Transaction Third Party Processing Revenues, 2006-2011 (in billions of dollars)
  
  
• Competitive Overview
  • Market Involves Numerous Participants
  • TPP Turmoil Mirrors Overall State of Healthcare Business
  • Third Party Administrators (TPAs) Manage Healthcare Programs TPAs Offer Extended TPP Services
  
  Competitor Profile: Emdeon Corp.
  • Constant Reinvention Is Industry Leader’s Strategy
  • Table 4-3: Emdeon Corp. Financial Performance, 2004-2006 (in millions of U.S. dollars)
  • Business Services Are Primary TPP Engine
  • Change in Business Focus Results in TPP Spin Off
  • Strengthening the Core Brand
  • TPP Focus Will Be on the New Company
  
  
• Competitor Profile: Per-Se Technologies, Inc.
  • Transaction Leader Offers Business Services to the Healthcare Industry
  • Table 4-4: Per-Se Technologies, Inc. Financial Performance, 2003-2005 (in millions of U.S. dollars)
  • Per-Se Targets Three Business Segments
  • Physicians
  • Pharmacies
  • Hospitals
  • Continued Growth Through New Clients and Products
  
  
• Competitor Profile: MedAvant/ProxyMed, Inc.
  • Networking Is MedAvant’s Core Business
  • Table 4-5: MedAvant/ProxyMed, Inc. Financial Performance, 2004-2006 (in millions of U.S. dollars)
  • Standardizing on a Single Product Platform
  • Aggressive Expansion via Acquisitions
  • Acquisitions at the Expense of Revenue Growth?
  
  
• Marketing and Service Trends
  • Expanding Existing Networks
  • Shifting to Electronics Fund Transfer
  • Closing the Transaction Loop Will Help Lower Costs
  • Debit Cards for Account-Based Health Plans
  • Consumer-Driven Healthcare, Debit Use May Spur More TPP
  • Cards Provide Benefits to the Industry
  • Cards Provide Convenience for Patients and Providers
  • Industry Must Comply with New HIPAA Regulations
  • Privacy and Security Compliance
  • Transaction and Code Sets Compliance
  • HIPAA Update and Implementation Challenges
  • Additional Regulation of Transaction Services
  
  
• Looking Ahead
  • Cost Concerns Will Drive Further Consolidation
  • Healthcare Costs Expected to Rise Substantially
  • Table 4-6: Healthcare Spending by U.S. Consumers and Businesses, 2003-2016
  • Greater Consumer Involvement in Own Healthcare Necessitates More Flexible TPP
  • A Whole New Universe of Transactions
  • Figure 4-2: Number of Healthcare Transactions in the U.S., 2003-2016 (in millions)
  • A Converging TPP Marketplace
  • Competitive Aspect of Proprietary Systems Slows Adoption of Standardized Electronic Health Records
  • Finalized Medicare Standards Set for 2008

Appendix: Addresses of Selected Marketers