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Taking Charge: Essentials of US Bank Card Acquiring |
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As the cards industry continues to grapple with the maturation of core credit products and the fast-evolution of newer vehicles like debit and prepaid, the credit card merchant acquiring function remains an essential piece of the electronic payments puzzle. Unlike card issuance, which generates income by managing credit risk and interest spread, the credit card merchant acquiring function creates fee-based revenue by handling, routing, and settling transactions. New research from TowerGroup estimates that two trillion transactions will be processed by merchant acquirers worldwide in 2006.
Thriving on economies of scale, the United States merchant acquiring business is dominated by five powerhouse processors focused around three different business models: joint venture;
acquisition; and organic growth. Sharing over 90 percent of U.S. transaction volume, TowerGroup estimates that the volume driven by these merchant acquirers will approach 46 billion transactions in 2006.
Given the concentration of large merchant acquirers in the United States, TowerGroup believes consolidation of key players is unlikely. Instead, growth opportunities are likely to come from
competition either between U.S. acquirers or with those outside the United States. While the overall outlook is positive, TowerGroup feels the merchant acquiring industry must make some
important changes to continue to succeed in the current operating environment - including improving security to control fraud at the point of sale and managing the implications of emerging
technologies.
http://www.towergroup.com |
