Skip to content
Payment Card YearbooksPayment Card Yearbooks
Evolution of the merchant acquiring competitive landscape

Evolution of the merchant acquiring competitive landscape

In the years between 2017 and 2021, the electronic payments industry grew at 30% and 13% CAGRs in volume and value of transactions respectively; for card acquiring specifically, the volume of transactions grew at 23% p.a. over the same period.

Merchant acquiring, and its corresponding industry, payments acceptance, are two major parts of the overall global payments industry and key enablers of economic activity.

Overall, electronic payments adoption has been growing globally, across an increasingly varied mix of payment rails and interfaces and transaction channels, to reach a volume of over 1.1 trillion transactions by 2021 at an annual compounded growth rate (CAGR) of 30% between 2017 and 2021 – according to the findings of a new report by Arkwright.

In the same period, the total value of transactions grew at a CAGR of 13%, and the implication is therefore that electronic payments are being used for ever smaller values and, as such, increasingly are a substitute for cash.

This points to non-card methods growing in relevance vis à vis card payments – according to Evolution of the merchant acquiring competitive landscape.

Looking at the share of processed transaction by acquirer, it emerges that the smaller acquirers are those whose market share of processed transactions is growing compared to larger industry players.

The merchant acquiring industry is subject to a significant and ongoing evolution and, due to various factors, is facing a comprehensive reconfiguration.

The emergence of online channels, new business models, such as marketplaces, and the overall ongoing shifts in the acquiring value chain have led to the development of a variety of business models focusing on defined sections of the acquiring transaction lifecycle.

Value propositions have emerged, closely address merchant needs, with a new range of players operating across multiple business models in parallel.

The industry is subject to intense lateral rivalry between acquiring players competing on the basis of better ability to meet merchants’ requirements, running a blue-ocean strategy attack from lower, often underserved segments of the value chain, and who are now expanding their reach to larger merchants.

This, of course, is before we have even mentioned the growing wave of large merchants aiming to take active ownership of their own payment environments.

This is a challenging competitive context with a potential upside for those companies able to position themselves rightly in a growing market.

Success will be subject to the ability to respond to merchants’ needs, adapting business models to fit three key priorities:

Monitoring and evaluating alternative business opportunities with the ability to act fast. This is a fast-moving industry and the ability to think strategically beyond the own business model, to evolve, and diversify, are key to retain any competitive defendable position.

Retaining merchant ownership and intimacy. This is a true lasting asset in an industry where most of the other capabilities tend to be pushed to a commodity status, and in an environment where services can be sourced, re-combined and rewrapped with relative ease.

Developing value propositions beyond industry borders. Payments are enablers in a transaction with other steps and complexities around it. Identifying complementary opportunities, the right partnerships and suppliers, and aiming, as a coalition of partners, to address a merchant need are key to relationship building.

To read the full report CLICK HERE

 

The post Evolution of the merchant acquiring competitive landscape appeared first on Payments Cards & Mobile.

Cart 0

Your cart is currently empty.

Start Shopping