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The North American Market for Third Party Payroll, Payment, and Healthcare Transaction Processing, 3rd Edition

The North American market for third party processing (TPP) services continues to perform well despite the global recession, with 2008 sales at $62 billion based on exceptionally strong growth during the past five years, and with 9%-10% average annual gains forecast through 2013. Seeking to offset the impact of lower employment figures in the payroll space and reductions in consumer use of credit in the payment space, third party processors continue to bank on the ongoing move from paper to electronic processing while waiting for government stimulus initiatives to kick in, especially in the healthcare arena. During the down economy major TPPs are also promoting new technologies to give their businesses a boost, working to increase revenues from existing clients, and tapping into related growth areas such as human resources outsourcing in the payroll space and mobile transactions in the payment space. At the same time, the market continues to see competitive upheaval, including Heartland’s 2008 purchase of the TPP business of Alliance Data Systems, and Fidelity National’s 2009 acquisition of Metavante in the payment market; and Emdeon’s 2008 emergence as an independent company and McKesson’s purchases of Per-Se (2007) and RelayHealth (2008) in the healthcare space.

This fully updated report critically and quantitatively assesses the market for data and payment-related transaction outsourcing. The report focuses particularly on three key segments—electronic payment processing, payroll processing, and healthcare transaction processing—with separate chapters tracing the service trends, market trends and competitive strategies driving market growth and competition within each of these industry segments. The report also examines third party processing as it relates to the Internet, as well as the development and expansion of Internet processing applications. In addition, it identifies and assesses the economic drivers and regulatory changes shaping each segment of the industry, as well as the trend whereby major competitors are adopting technologies and leveraging their massive infrastructures to expand beyond their traditional core businesses. Helping to illustrate these trends are competitive profiles of leading market participants including payroll processors Automatic Data Processing, Inc. (ADP), Paychex and Ceridian; payment processors First Data Corp., Fiserv and TSYS; and healthcare transaction processors Emdeon Corp., SSI Group and Availity.

Read an excerpt from this report below.

About Author

Marigny Research Group, Inc. (MRG) is a producer of customized private-label market research reports, offering services including title development, research, market analysis, writing, editing, proofreading, desktop production, and marketing support, with a network of market research professionals that extends across the United States. Since 1986 MRG has authored more than 200 reports published under the Packaged Facts imprint, covering consumer packaged goods, demographic, retail, and financial markets. Within these and other areas, MRG has developed complete report lines, most recently focusing on the burgeoning market for pet products and services.


Market Insights: A Selection From The Report


Looking Ahead

Mergers and acquisitions have reduced the number of large third party processors and there may not be too much more room for further consolidation. Meanwhile, big bank mergers have shrunk the pool of card-issuing clients while pushing more payment processing functions in house. Industry watchers believe that many banks may eventually tire of the headaches and expense of payment processing, but in the short term at least, TPPs face a shrinking market for their services along with a U.S. population that is buying fewer goods.

Accordingly, Packaged Facts believes large TPPs will continue looking for unexplored opportunities in international markets while waiting out the economic downturn at home. First Data and Global Payments already have an international focus, while TSYS has long made clear its international ambitions. Furthermore, with initiatives like Fiserv’s Fiserv 2.0 and TSYS’s n>gen, TPPs will continue to tout their technological abilities and to develop new services. At the other end of the spectrum, poor economic conditions are also squeezing ISOs (Independent Service Organizations), which are fighting over a smaller pool of business as their customers consolidate or close up shop.

At the same time, the third party processing industry believes the future of payments resides in the cell phone. A Fiserv-sponsored survey found that the number of respondents who would be interested in using mobile banking jumped from 49% in 2006 to 75% in 2008. The young adult demographic responded even more emphatically, at 83% (American Banker, September 9, 2008). The rise of so-called smart phones like the iPhone and the Blackberry Storm, which have larger screens and better Internet access than typical cell phones, is expected to drive the category. Accordingly, the big TPPs have been developing their own cell phone initiatives by partnering with lesser-known, often international tech firms. Fiserv Mobile Pay is using technology from M-Com of New Zealand, Metavante has entered into a venture with Monitise of the United Kingdom, and Fidelity National’s partner is mFoundry, Inc. So far these services tend to be focusing on providing Internet banking—tasks like transferring funds and checking balances—through a mobile phone’s Internet browser.

In the News


Third Party Processors Parlay Technology into Market Growth

New York, August 13, 2009 Despite a sluggish economy that has slashed jobs and dampened credit card usage, the third party processing (TPP) market grew by more than 11% in 2008, to reach $61.9 billion, and is poised to jump 57% through 2013, according to The North American Market for Third Party Payroll, Payment and Health Care Transaction Processing, 3rd Edition by leading market research publisher Packaged Facts.

Third party processors are outside organizations that process and manage transactions between sellers and buyers. Corporate functions contracted out to these third parties are usually “back office” or non-revenue generating activities: payroll, human resources, customer service, accounting, payables and receivables, record keeping and transaction processing.

Seeking to offset the impact of lower employment figures in the payroll space and reductions in consumer use of credit in the payment space, third party processors continue to bank on the ongoing move from paper to electronic processing.  Major TPPs are also promoting new technologies to give their businesses a boost, working to increase revenues from existing clients, and tapping into related growth areas such as human resources outsourcing and mobile transactions.

Healthcare TPPs are counting on a boost from Uncle Sam to maintain growth. “The federal government’s massive stimulus package allocates a portion to healthcare IT,” notes Tatjana Meerman, publisher of Packaged Facts. “Additionally, the drive for healthcare reform is helping to train public attention on using technology to streamline healthcare for patients and providers, a shift that won’t come overnight but is likely.”

The North American Market for Third Party Payroll, Payment and Health Care Transaction Processing, 3rd Edition assesses the market for data and payment-related transaction outsourcing.  The report focuses on three key segments—electronic payment processing, payroll processing, and healthcare transaction processing—with separate chapters tracing the service trends, market trends and competitive strategies driving market growth and competition within each of these industry segments. 

About Packaged Facts - Packaged Facts, a division of Market Research Group, publishes market intelligence on a wide range of consumer market topics, including consumer goods and retailing, foods and beverages, demographics, pet products and services, and financial products.  Packaged Facts also offers a full range of custom research services.

  • Executive Overview
    • Scope & Methodology
      • Market Definition
      • Report Methodology
    • Market Overview
      • Market to Near $100 Billion in Next Five Years
      • Major Companies Lead, But Plenty of Smaller Players
      • Little Competitive Overlap
      • A Move to the Web
      • A Period of Retrenchment
      • Impact of Recession-Moving Forward
    • Payroll Processing
      • The Basics of Payroll Processing
      • Payroll TPP Revenues Top $30 Billion in 2008
      • Market Penetration at Less Than Half
      • Negative Employment Trends
      • Payroll TPP Organizations Growing in Number
      • The Market Leaders
      • Scope of Payroll Processing Expanding
      • Looking Ahead
    • Payment Processing
      • Overview of Services
      • Double-Digit Growth Continues But Tempers
      • Credit Card Cutbacks, Shift to Debit
      • Bank Mergers Could Mean Smaller TPP Market
      • Competitive Landscape
      • Pool of Competitors Consolidates Further
      • Looking Ahead
    • Healthcare Transaction Processing
      • Overview of Services
      • Healthcare Transaction TPP Charting Steady Growth
      • Increasing Costs a Major Concern in Healthcare Business
      • Healthcare System Turns to TPPs for Cost Efficiencies
      • Upheaval Among Market Kingpins
      • Moving to Electronic Fund Transfer
      • Looking Ahead
  • Payroll Processing
    • Introduction
      • The Basics of Payroll Processing
      • The Rationale for Payroll Outsourcing
      • Drawbacks to Payroll Outsourcing
    • Market Trends
      • Market Sizing Methodology
      • Payroll TPP Revenues Top $30 Billion in 2008
        • Table North American Market for Payroll Third Party Processing, 2004-2008 (in billions of dollars)
      • Potential Client Base Over 5 Million Strong
        • Table Number of Firms, Establishments, Employees and Annual Payroll of U.S. Employer Firms, 2006
      • Negative Employment Trends Bad News for the Industry
        • Table Number of Employees on Non-Farm Payrolls, 2003-2008
        • Table Annual Percentage Change in Non-Farm Employment by Month, 2003-2009
      • Avenues for Growth
      • Small Business Health Another Key Barometer
      • Projected Market Growth
        • Table Projected North American Market for Payroll Third Party Processing, 2008-2013 (in billions of dollars)
    • Competitive Overview
      • Core Payroll TPP Services
      • Payroll TPP Organizations Growing in Number
      • Plenty of Small Firms, But Largest Ones Dominate
        • Table Payroll Services Enterprises: By Employment Size and Annual Payroll, 2006 (number and dollars)
      • The Market Leaders
        • Table Leading Payroll Third Party Processors, 2008 (in millions of dollars)
      • The Role of Business Process Outsourcers (BPOs) and
      • 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
      • Growth and Outlook
      • New Offerings Point to In-House Strategy
    • Competitor Profile: Paychex, Inc.
      • Building a Big Business on a Small Business
      • Payroll Is Key to Paychex's Success
      • A Unique Business Culture
      • Small Businesses' Problems Pose Problems for Paychex
    • Competitor Profile: Ceridian
      • Payroll Is Just the Beginning
      • Payroll and Payment Kept Separate
      • Wellness and the Web
    • Marketing and Service Trends
      • Scope of Payroll Processing Expanding
      • Move to the Web
      • "Branded Payroll" Appeals to Accountants
      • Increasing Interest in Payroll Cards
        • Table Payroll Costs for Unbanked Consumers (in dollars)
      • An Attractive Market for PEOs
    • Looking Ahead
      • Deploying Technology and Allocating Resources
      • Waiting Out the Downturn
      • Branding Options at the Small Business Level
      • More Companies Vying for Business
        • Table Number of U.S. Companies Providing Payroll Processing Services, 2002-2012
      • The Effect of Foreign Outsourcing
      • Payroll Cards' Expanding Niche
      • Evolving Payroll Methods
  • Payment Processing
    • Introduction
      • Overview of Third Party Payment Processing
      • The Appeal of Non-Cash Transactions
      • Credit Card Processing
      • Debit Transaction Processing
      • Consumers Increasingly Prefer Electronic Payments
        • Table Distribution of Number of Non-cash Payments, 2003-2006 (percent)
        • Table Number of Non-cash Payments, 2003-2006 (in billions)
      • Size of the Electronic Transaction Market
      • Trends in Transaction Fees
    • Market Trends
      • Double-Digit Growth Continues But Tempers Under Market Pressures
        • Table North American Market for Third Party Payment Processing, 2004-2008 (in billions of dollars)
      • Healthy Growth in Credit and Debit Transactions
        • Table Number of Electronic Payment Transactions by Type, 2003 vs. 2006 (in billions)
      • Gift Cards: A Growth Area
        • Table Projected Growth in U.S. Gift Card Volume, 2007-2012 (in billions of dollars)
      • Credit Card Cutbacks, Shift to Debit
      • Bank Mergers Could Mean Smaller TPP Market
      • Public Backlash Against Credit Card Industry
      • High Interchange Rates May Hurt TPPs
      • The PIN- vs. Signature-Based Debit Tug-of-War
      • Healthy Growth Through 2013
        • Table Projected North American Market for Third Party Payment Processing, 2008-2013 (in billions of dollars)
    • Competitive Overview
      • Competitive Landscape
        • Table Revenues of Leading Third Party Payment Processing Companies, 2005-2008 (in millions of dollars)
      • Pool of Competitors Consolidates Further
      • Across the Border
      • Online Payment Providers
        • Table Fee Structure for PayPal and Google Checkout, March 2009 (dollars and percent)
    • Competitor Profile: First Data Corp.
      • A Market Goliath
      • Company Background
      • Consolidation, Cost-Cutting and Acquisitions
      • New Payment Options
    • Competitor Profile: Fiserv, Inc.
      • The Largest Nonbank Check Processor
      • Popular with Smaller Clients
      • Acquisitions and Sales
      • Adventures in Technology
    • Competitor Profile: Total System Services, Inc. (TSYS)
      • Newly Independent
      • Shifting Customers
      • International Outreach
      • TSYS Enters N>Gen
    • Competitor Briefs
      • Alliance Data Systems Corp.
      • Fidelity National Information Services, Inc.
      • Global Payments, Inc.
      • Heartland Payment Systems, Inc.
      • Metavante Technologies
    • Looking Ahead
      • TPPs Aiming for Reinvention
      • Mobile Banking and Payments
      • Contactless/RFID Payments
  • Healthcare Transaction Processing
    • Introduction
      • The Basics of Healthcare Transaction Processing
      • Core Healthcare Transaction TPP Services
      • The Health Insurance Portability and Accountability Act
    • Market Trends
      • Healthcare Transaction TPP Charting Steady Growth
        • Table North American Market for Healthcare Transaction Third Party Processing, 2004-2008 (in billions of dollars)
      • Increasing Costs a Major Concern in Healthcare Business
      • Healthcare System Turns to TPPs for Cost Efficiencies
      • U.S. Medicare Leads in Electronic Processing
        • Table Electronic Media Claims Rates for Medicare Carriers, 2000-2007 (number and percent)
      • Private Sector Lags in Electronic Processing
        • Table Paper vs. Electronic Billing and Payment Transactions, 2009 (percent)
      • Obstacles to Electronic Transaction Adoption
      • Seeking Industry Standards
      • Market Growth to Pick Up Steam
        • Table Projected North American Market for Healthcare Transaction Third Party Processing, 2008-2013 (in billions of dollars)
    • Competitive Overview
      • Market Involves Myriad Participants
      • Market Leaders and Competitive Upheaval
      • McKesson Acquires Per-Se and RelayHealth
      • MedAvant Regroups as Capario
      • Third Party Administrators (TPAs) Manage Healthcare Programs
    • Competitor Profile: Emdeon Corp.
      • A Newly Independent Company Looking to Go Public
      • Emdeon's Range of Services
      • Eager for Growth
      • A Strong Voice for the TPP Industry
      • Changes in Industry May Challenge Emdeon's Lead
    • Competitor Profile: The SSI Group, Inc.
      • A Stalwart Among Healthcare TPPs
      • Services and Offerings
      • A Partnership Strategy
    • Competitor Profile: Availity
      • A Web-Based Portal for Physicians
      • Expansion Beyond Florida
      • Growing Its Services
    • Marketing and Service Trends
      • Expanding Existing Networks
      • Speeding Up Provider Cash Flow
      • Shift from Clearinghouse Model to Web-Based Systems
      • Moving to Electronic Fund Transfer
      • Creating Standards for Patient ID Cards
      • Consumer-Driven Healthcare, Debit Use Will Spur More TPP
      • Industry Must Comply with HIPAA Regulations
    • Looking Ahead
      • Federal Support Likely Means Bright Future for Healthcare IT Firms
      • U.S. Healthcare Costs Expected to Rise Substantially
        • Table Healthcare Spending by U.S. Consumers and Businesses, 2003-2018 (dollars and percent)
      • Greater Consumer Involvement in Own Healthcare Necessitates More Flexible TPP
      • A Whole New Universe of Transactions
      • Electronic Medical Records Promise Efficiency, Savings and Improved Care
  • Company Addresses

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