Companies in this industry provide services such as credit card processing, electronic funds transfer, and check clearing. Major companies include Alliance Data Systems, First Data, Global Payments, Heartland Payment Systems, MasterCard, Visa, and Western Union (all based in the US), as well as China UnionPay (China), Cielo (Brazil), and Moneris Solutions (Canada).
Worldwide, markets with strong growth in payment services include Europe, the Asia/Pacific region, and South America. Many large credit card processors operate and maintain processing centers globally. About half of all credit card transactions occur in the US and Canada; about 25% of transactions are in Europe and 20% in the Asia/Pacific region, according to the Nilson Report. More than 8 billion credit, debit, and prepaid cards are in circulation around the world.
The US financial transaction processing industry includes about 4,700 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $65 billion.
Demand is driven by consumer spending. The profitability of individual companies depends on efficient operations, as services are sold largely based on cost. Large companies have economies of scale in processing and typically can provide more services; small companies can compete by specializing in industries and providing custom services. The US industry is highly concentrated: the top 50 companies account for about 85% of industry revenue.
Over the past decade, the financial transaction processing industry has come under increasing pressure from fast-growing financial technology (aka fintech) companies that...