Global Payment Processing Market Research
Payment processing offers services for transactions completed through debit, credit or gift cards. The processor generally is a third party providing these services electronically. The process takes place in two phases: authorization (getting approval for the transaction from the issuing bank) and settlement (transferring the funds from the issuing bank to the merchant's account). Apart from these core functions, some payment processors also provide payment fraud detection, business analytics and data security solutions.
The non- cash transactions which the payment processor industry services are a more than a $365 billion business. PayPal Holdings Inc., Chase Paymentech, First Data Corporation, Worldline and Global Collect are some of the payment processors operating in this business.
Payment processors provide various products and technology to meet the changing payment options:
- Point-of-Sale (POS) payment solutions: These options allow the merchant to accept credit or debit card payments by having access to card machines and POS systems for use on smart phones, tablets, or other mobile devices to process customer payments.
- Fraud security solutions: The service providers also offer a comprehensive set of fraud prevention and data encryption technologies to manage payments and prevent fraud.
Regional Market Shares
North America and Europe are the leading regions in the payment processing business as more than 60% of all global card transactions take place in those regions according to estimates from Capgemini and RBC.
The USA drove growth in North America with the country accounting for more than 35% of the global card transactions.
Europe is a big market and handles about a quarter of global card transactions. The market is somewhat fragmented: the top ten service providers process less than 60% of European card transactions. Cards themselves represent about 40% of the non-cash transactions (those other than by direct debits or cheque) in this region.
However emerging countries are likely to account for half of the total non-cash market in the medium term, according to estimates from Capgemini and RBC. The growing acceptance of cards at various POS units and consumer preference for cards are likely to increase the use of cards in most of these countries.
Mobile payments (M-Payments) are becoming a substantial component of non-cash transactions. This growth is likely to drive the industry to $721 billion in the years to come. In the USA, about 50% of digital buyers are expected to make mobile payments for purchases in the near future. This potential rise in m-payments has encouraged many banks to launch their own smartphone and tablet apps as well as dedicated mobile sites. PayPal and Google Wallet are some of the popular mobile payment apps worldwide. Banks with in-house payment processing are investing to seize this growing industry. For instance, The Reserve Bank of Australia is developing a New Payments Platform in collaboration with the industry. This is expected to clear and settle payments including M-payments within a few seconds.
The growing demand from bank card users for quicker, easier and more secure transactions is inducing the payment processors to continuously upgrade their technology. One such entry in the industry is the Near Field Communication (NFC) technology. To make NFC-enabled transactions through smart phones, the user must link his/her bank account or bank card with NFC-supporting applications, such as Visa Contactless Payments. The application will automatically detect the need to make a payment when in close proximity to another NFC device that is structured to receive payments. Once detected the payment is completed when the authentication pin is keyed into the customers phone. Capgemini expects that the convenience and security offered by this technology means that more than 36 billionNFC enabled mobile payments will be made globally in the near future.
One of the growing concerns with non-cash payments is the threat of financial fraud. In the USA for instance, card fraud costs more than $8 billion annually. To combat this problem EMV (Europay, MasterCard and Visa) chip technology is the latest trend being adopted as a global standard for credit card and debit card payments. With this technology payment instruments like cards and mobile phones now have embedded microprocessor chips that store and protect cardholder data. This system will help increase security and reduce card fraud. To further encourage this shift, Visa, MasterCard, Discover and American Express have initiated a new system whereby it is imperative for the merchants or card issuing banks to have chip-certified terminals as they may be liable for the cost of counterfeit fraud in case they do not.
List of Top Analysts
- Electronics Transactions Association
- The Third Party Payment Processors Association
- National Merchants Association
- The International Card Manufacturers Association
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