Directory of US Merchant Acquirers

The information in this report is based upon information we consider
reliable, but its accuracy and completeness cannot be guaranteed. It is
shared for educational purposes only. The sources of this information
includes publically available or published information from company
websites, surveys completed by the companies, TSG insights and reports,
and The Nilson Report.
Confidential. For discussion purposes only.
© Copyright 2012. The Strawhecker Group. All Rights Reserved.
Directory of U.S.
Merchant Acquirers
www.TheStrawGroup.com / www.PaymentsPulse.com
Merchant Acquirer Definition
For the purposes of this report, a merchant acquirer is an entity that solicits merchants
on behalf of an Acquiring Bank for payment card acceptance and enables card payments
from customers. An Acquirer generally holds responsibility for providing customer
service, merchant-level support, merchant-level compliance with Association rules, and
underwriting of merchant accounts.
Resource Links
General ISO Resources:
•
Visa Global Registry of Service Providers Including Merchant ISOs
•
List of Validated Payment Applications
Retention and Alternative Revenue ISO Partners:
•
National Benefits Programs
•
Royal Group Insurance
TSG Resources:
•
Acquisition Multiples Distribution & TSG Merchant Database Attrition Summary
•
Merchant Aggregation Information
•
Case Study: Driving Value Through Competitive Bidding
Confidential. For discussion purposes only.
© Copyright 2012. The Strawhecker Group. All Rights Reserved.
2
2
Top 10 Acquirers: Historical Data
Top 10 US Acquirers – Market share
(1988 – 2007)
Top 10 US Acquirers – Market share: The following chart details the Top 10 US merchant acquirers and the top 50 acquirers total market share from 1988 to 2007. As the data in the
below charts show the market shares of the top acquirers, specifically the top 10, has fluctuated widely. In 1988 the market was highly fragmented with the top 10 controlling only
39% of total volume. This number jumped to 67% in 1997 as the top 10 aggressively gained market share to build scale in their businesses. Beginning in 2006 the top 10 acquires
began to lose market share as the industry’s lucrative characteristics attracted an increased amount of competition from smaller regional ISOs and banks.
1988
Company
1997
Volume
($M’s)
Share
%
Company
2006
Volume
($M’s)
Share
%
Company
2007
Volume
($M’s)
Share
%
Company
Volume
($M’s)
Share
%
National Processing Co.
21,093
8.5
Chase Manhattan*
94,943
15.5
Chase Payment Sol.
563,669
27.9
Chase Payment Sol.
599,375
26.5
NaBanco (NB)
14,936
6.0
National Processing Co.
74,809
12.2
BA Merchant Services
283,259
14.0
First Data
353,514
15.6
Citibank
14,805
6.0
First Data Corp (NB)
64,711
10.6
First Data
269,793
13.4
BA Merchant Services
279,873
12.4
Bank of America
9,433
3.8
Paymentech (NB)
46,223
7.6
NOVA Info. Sys.
155,970
7.7
NOVA Info. Sys.
171,994
7.6
National Data Corp. (NB)
7,861
3.2
BA Merchant Services
29,080
4.8
Fifth Third
136,681
6.8
Fifth Third
154,866
6.9
Citizens Fidelity
7,730
3.1
National Data Corp. (NB)
22,915
3.8
Wells Fargo
77,845
3.9
Wells Fargo
86,433
3.8
Security Pacific Nat’l
6,289
2.5
Fifth Third Bank
21,417
3.5
Global Payments
67,913
3.4
Global Payments
83,151
3.7
First Interstate Bancard
5,765
2.3
U.S. Bancorp
20,104
3.3
Heartland Payments
43,336
2.2
Heartland Payments
51,935
2.3
Wells Fargo
5,241
2.1
First of Omaha
16,902
2.8
First National Merch. Sol.
38,364
1.9
First National Merch. Sol.
46,669
2.1
Banc One
3,878
1.6
Banc One*
16,520
2.7
RBS Lynk
27,836
1.4
RBS Lynk
34,005
1.5
Top 10 Acquirers
161,134
39%
Top 10 Acquirers
407,624 66.7%
Top 10 Acquirers
1,664,666 82.5%
Top 10 Acquirers
1,861,733 82.3%
Top 50 Acquirers
161,134 64.8%
Top 50 Acquirers
594,662 97.3%
Top 50 Acquirers
1,985,234 98.4%
Top 50 Acquirers
2,204,080 97.5%
All Bankcards
248,796
All Bankcards
611,039
All Bankcards
2,016,793
All Bankcards
2,261,652
100%
100%
•Individual market shares may not sum to Top 10 totals due to rounding
Confidential. For discussion purposes only.
© Copyright 2012. The Strawhecker Group. All Rights Reserved.
3
100%
100%
Top 10 Acquirers: Historical Data
Top 10 US Acquirers – Market share
(2008 – 2011)
Top 10 US Acquirers – Market share: The following chart details the Top 10 US merchant acquirers and the top 50 acquirers total market share from 2008 to 2011. The data
from 2008 to 2011 shows market consolidation amongst the largest acquirers in the industry. From 2007 to 2011 the drop in Top 10 market share results from smaller
acquirers gaining ground as these companies have seen recent success in establishing some foothold in the industry. This has been accomplished by utilizing the vehicle of
technology driven payments solutions and by specializing in specific vertical markets, often via strategic partnerships with non-payments companies.
2008
Company
2009
Volume
($M’s)
Share
%
Company
2010
Volume
($M’s)
Share
%
Company
2011
Volume
($M’s)
Share
%
Company
Volume
($M’s)
Share
%
Chase Payment Sol.
566,899
23.8
BA Merchant Services
457,729
19.3
BA Merchant Services
472,989
18.3
BA Merchant Services
489,059
17.2%
First Data
293,175
12.3
First Data
389,801
16.4
First Data
402,000
15.5
First Data
408,588
14.4%
BA Merchant Services
283,086
11.8
Chase Payment Sol.
294,592
12.4
Chase Paymentech Sol.
336,310
13.0
Chase Paymentech Sol.
398,083
14.0%
Elavon (previously NOVA)
181,065
7.6
Elavon
171,361
7.2
Fifth Third
197,643
7.6
Vantiv (Fifth Third)
218,370
7.7%
Fifth Third
164,912
6.9
Fifth Third
159,420
6.7
Elavon
182,676
7.1
Elavon
195,410
6.9%
Citi Merchant Services
102,818
4.3
Citi Merchant Services
106,288
4.5
Citi Merchant Services
121,,570
4.7
Citi Merchant Services
142,185
5.0%
Global Payments
92,679
3.9
Global Payments
97,803
4.1
Global Payments
109,042
4.2
Global Payments
120,588
4.3%
Wells Fargo
90,841
3.8
Wells Fargo
93,868
3.9
Wells Fargo
105,518
4.1
Wells Fargo
120,439
4.2%
Heartland Payments
74,684
3.1
Heartland Payments
67,772
2.9
Heartland Payments
71,603
2.8
Heartland Payments
79,446
2.8%
First National Merchant
Solutions
Top 10 Acquirers
51,384
2.2
60,558
2.6
TSYS Merchant Solutions
67,408
2.6
TSYS Merchant Solutions
75,150
2.6%
1,902,547
79.7%
First National Merchant
Solutions
Top 10 Acquirers
1,899,192 79.9%
Top 10 Acquirers
2,066,757 79.8%
Top 10 Acquirers
2,247,316
79.2%
Top 50 Acquirers
2,323,874
97.7%
Top 50 Acquirers
2,335,730 98.2%
Top 50 Acquirers
2,541,417
98.1
Top 50 Acquirers
2,775,938
97.9%
All Bankcards
2,379,846
100%
All Bankcards
2,377,741
All Bankcards
2,589,595
100%
All Bankcards
2,836,417
100%
100%
•Individual market shares may not sum to Top 10 totals due to rounding
Confidential. For discussion purposes only.
© Copyright 2012. The Strawhecker Group. All Rights Reserved.
4
Industry Highlights
Directory Breakdown of Sponsor Banks: Number of Relationships
Estimated/As Available; Does Not Total 200 as Multiple Acquirers Have Multiple Bank Sponsors
80
43
31
21
17
14
10
9
Wells Fargo
Chase
Confidential. For discussion purposes only.
© Copyright 2012. The Strawhecker Group. All Rights Reserved.
HSBC
US Bank
Merrick Bank
FNBO
5
11
9
8
Synovus
Deutsche
Harris
Self
Sponsored
Other
5
Industry Highlights
Directory Breakdown of Front-end and Back-end Processors
Estimated/As Available
Number of Front-end Processing Relationships
Number of Back-end Processing Relationships
94
93
70
62
53
42
32
28
20
16
First Data
TSYS
Global
Payments
In-House
Other
First Data
TSYS
Global
Payments
In-House
Other
Note: does not total 200 as multiple Acquirers have multiple processors
Confidential. For discussion purposes only.
© Copyright 2012. The Strawhecker Group. All Rights Reserved.
6
6
Company Overviews
PORTFOLIO STATISTICS
STRUCTURE
• Public (NYSE:BAC)
Bank Card (V/MC) Dollar Volume
($ Millions)
COMPANY VITALS
Directory Dollar Volume Rank: #1
Location: Atlanta, GA
Founded: 2009
Front-end Processor: TSYS & In-House Network
Back-end Processor: TSYS & In-House, First Data
Sponsor Bank: Bank of America, N.A.
Website: www.merch.bankofamerica.com
BUSINESS OVERVIEW
• A unit of Bank of America, Bank of America
Merchant Services is the number one rated U.S.
payments processor
• BofA Merchant Services handles more than nine
billion Bank Card transactions annually
• BofA Merchant Services focuses on verticals
including retailers, restaurants, services with tip
(taxi/limo, salons), internet/ecommerce, lodging,
trade services, and mail/phone order
KEY MANAGEMENT
Tom Bell, CEO
JoAnn P. Carlton, General Counsel & Corporate
Secretary
Mike Gramz, CRO
Carl Mazzola, EVP Sales & Portfolio Management
Tina McCoy, CMO
Brett Narlinger, EVP Strategic Client Development
Michael Reed, COO
Trevor Rubel, EVP Strategy & Emerging Products
Phil Wall, CFO
Confidential. For discussion purposes only.
© Copyright 2012. The Strawhecker Group. All Rights Reserved.
• Bank of America Merchant Services is
approximately 48.5% owned by First Data, through
joint venture, 5% owned by Rockmount
Investments LLC, and the remaining 46.5% is
controlled by Bank of America.
$489,059
$472,989
$457,729
2009
2010
RECENT ANNOUNCEMENTS
2011
•
CAGR: 3.4%
Press Releases
Bank Card (V/MC) Transactions
(Millions)
9,577
9,261
8,908
2009
2010
2011
CAGR: 3.7%
Active Merchant Outlets
826.0
(Thousands)
850.0
634.2
2009
2010
CAGR: -12.4%
7
2011
ADDITIONAL DETAILS
Vertical Specializations
• Large Retail
• Airlines
• Government
• Restaurants/Hotels
Company Overviews
PORTFOLIO STATISTICS
STRUCTURE
• First Data and KKR announced a merger
agreement in April 2007. The transaction closed in
September 2007, at which time First Data became
a private company and was no longer listed on the
New York Stock Exchange.
• Is rumored to go public again in the 2013.
Bank Card (V/MC) Dollar Volume
($ Millions)
$408,588
COMPANY VITALS
Directory Dollar Volume Rank: #2
Location: Atlanta, GA
Founded: 1969
Front-end Processor: In-House
Back-end Processor: In-House
Sponsor Bank: Wells Fargo Bank, Citibank
Website: www.firstdata.com
BUSINESS OVERVIEW
•
•
•
•
The “900 pound gorilla of the industry” with the
most extensive technology and
feature/functionality offerings for its merchant
and client partners.
First Data serves more than six million merchant
locations, thousands of card issuers and millions
of consumers worldwide
Multiple processing platforms provide challenges
to both First Data and its clients due to the
difficulty of maintaining technology
enhancements on all platforms and making
available to all clients.
In 2009 the company teamed up with Bank of
America to create Bank of America Merchant
Services
$402,000
$389,802
2009
2010
•
CAGR: 2.4%
(Millions)
6,120
5,744
2009
5,885
2010
ADDITIONAL DETAILS
2011
CAGR: 3.2%
Active Merchant Outlets
(Thousands)
1,057.4
Confidential. For discussion purposes only.
© Copyright 2012. The Strawhecker Group. All Rights Reserved.
Press Releases
Bank Card (V/MC) Transactions
KEY MANAGEMENT
Jonathan J. Judge, CEO
Ed Labry, President, First Data N.A.
Ray Winborne, EVP & CFO
Kevin M. Kern, EVP CTO
John Elkins, President International Regions
RECENT ANNOUNCEMENTS
2011
2009
990.0
990.0
2010
2011
CAGR: -3.2%
8
Vertical Specializations
• Airlines
• Petroleum
• QSR
• B2B
• Grocery
• Restaurants/Hotels
Index
#
2Checkout, 130
A
Aamonte Bankcard, 137
ABC Mobile Pay, 139
Accelerated Payment Technologies, 140
ACH Direct, 141
Acquiring Solutions International, 125
Advanced Merchant Group, 74
Affinipay, 142
Alpha Card Services, 68
Alpine Bank, 123
Alpine Payment Systems, 143
American National Payments, 144
American Payment Systems, 146
America's Bankcard Alliance, 138
Applied Merchant, 145
Approval Payment Solutions, 86
Arvest Bank, 112
Axia, 80
B
BANCard Solutions, 147
BancCard, 148
Bank of America Merchant Services, 7
Bank of Hawaii, 77
Bankcard Services, 56
BankServ, 149
BBVA Compass, 51
Best Merchant Rates, 122
Bluestone Payments, 150
Braintree, 151
Branch Banking & Trust, 31
Bridgehampton National Bank, 124
C
Card Payment Services, 155
CardFlex, 135
Central Bancompany, 110
Central Bank, 126
Central Payment, 60
Century Bankcard Services, 81
Century Payments, 153
Chase Paymentech, 9
Chesapeake Payment Systems, 127
Cielo, 29
Citi Merchant Services, 12
Clark Brands, 154
Clearent, 82
ClearPay Processing, 103
Cocard Merchant Services, 58
Columbia Bank, 98
Commerce Bank, 43
Complete Merchant Solutions, 105
Coppermark Bank, 116
Credomatic USA, 156
Crescent Processing Company, 157
Cynergy Data, 33
D
Diamondcard International, 91
Diamond Mind, 158
Digital Financial Group, 159
Diversified Acquirers Group, 113
E
Eirth, 161
Elavon, 11
Electronic Cash Systems, 160
Electronic Data Payment Systems, 162
Electronic Merchant Systems, 79
Calpian, 152
Capital One Merchant Services, 52
Confidential. For discussion purposes only.
© Copyright 2012. The Strawhecker Group. All Rights Reserved.
208
Electronic Payment Exchange, 164
Electronic Payments, 66
Element Payment Services, 42
Eliot Management Group, 61
Elite Merchant Solutions, 67
eMerchantPay, 108
Encore Payment Systems, 87
Entrust Bankcard, 163
EVO Merchant Services, 21
EZ Pay, 165
F
Farmers & Merchants Bank, 118
Federated Payment Systems, 65
Financial Transaction Services, 44
First American Payment Systems, 35
First California Bank, 85
First Capital Payments, 92
First Citizens Bank, 72
First Citizens Bank & Trust, 107
First Data, 8
First Hawaiian Bank, 54
First Merchant Card Services, 128
First Merchant Payment Systems, 94
First National Bank Alaska, 102
First Niagara, 89
FirstMerit Bank, 99
FIS, 28
Five Star Merchant Services, 166
Frontline Processing, 167
Fulton Bank, 84
Index
G
Global Payments, 13
Global Processing Systems, 168
Granite Payment Alliance, 106
Gravity Payments, 64
H
Harbortouch, 41
Heartland Payment Systems, 15
Humboldt Merchant Services, 169
Hybrid Payments, 170
I
Integrity Payment Systems, 171
Intrix Technology, 95
Intrust Bank, 109
Intuit Payment Solutions, 23
iPayment, 24
IRN Payment Systems, 172
iTransact, 100
J
JetPay, 46
K
Key Merchant Services, 39
L
Leaders, 173
M
M&T Bank, 45
Mega M, 114
Meramak, 174
Merchant Data Systems, 176
Merchant e-Solutions, 29
Merchant Express, 177
Merchant Services Direct, 178
Merchant Warehouse, 179
Merchants Choice Payment Solutions, 50
Mercury Payment Systems, 26
Confidential. For discussion purposes only.
© Copyright 2012. The Strawhecker Group. All Rights Reserved.
MeritCard Solutions, 90
Merrick Bank, 22
Metro Bancard, 180
Michigan Retailers Association, 181
MLS Direct Network Inc., 57
MobiSquad, 163
Moneris Solutions, 25
mPay Gateway, 129
MSI Merchant Services, 36
Mutual of Omaha Bank, 131
Premium Card Solutions, 189
Priority Payment Systems, 48
ProPay, 97
N
S
R
Redwood Merchant Services, 37
Reliance Star Payment Services, 190
ReliantPay, 115
Renaissance Associates, 88
REPAY, 191
RevTrak, 119
National Merchants Association , 132
NationalLink, 182
Nationwide Payment Solutions, 59
NCMIC, 101
Newtek Business Services, 62
North American Bancard, 34
NXGEN Payment Services, 183
Omega Processing, 184
P
Pacific Continental Bank, 117
Payment Alliance International, 50
PaymentMax, 185
PayPros, 40
PayProtec, 186
Payscape Advisors, 83
PaySimple, 187
People’s United Bank, 93
Pivotal Payments, 75
Planet Payment, 188
PNC Merchant Services, 19
PowerPay, 47
Sage Payment Solutions, 32
SecureNet Payment Systems, 192
Shazam, 193
Simmons First National Bank, 121
Solveras, 194
Sovereign/Santander, 30
Square, 73
Sterling Payment Technologies, 195
Sterling Savings Bank, 104
Suntrust Merchant Services, 18
Swipely, 196
T
TD Bank, 55
The Bancorp Bank, 28
The Brennes-Jones Group, 197
TIB - The Independent Bankers Bank, 63
Total Merchant Services, 38
Transfirst, 20
Transpay Processing, 198
Trilogy Payment Solutions, 199
TriSource Solutions, 69
TSYS Merchant Solutions, 16
Turnkey Processing, 134
209
U
UMS Banking, 71
Unified Payments, 70
United Merchant Services, 76
United Payment Services, 200
US Bankcard Services, 201
US Merchant Payment Services, 202
US Merchant Services, 203
V
Value Exchange Corporation, 111
Valued Merchant Services, 204
Vantage Card Services, 96
Vantiv, 10
Veracity Payment Solutions, 78
Veteran Payment Systems, 205
W
Wells Fargo Merchant Services, 14
Wise Payment Systems, 206
World Payment Services, 133
WorldPay, 17
Y
Yapstone, 207
About TSG
The Strawhecker Group (TSG) is a management consulting company focused on the electronic payments industry. The
company specializes in providing financial institutions, acquirers, card associations, ISOs, processing companies and the
investment community with advisory services to maximize their growth and profitability. TSG is also a resource of merchant
acquiring industry research, benchmark studies and developing trends.
The Strawhecker Group is composed of seasoned veterans of the payments industry. Both Partners and Associates of the firm have held key senior
management positions at leading industry companies including First Data Corporation, Visa USA, Humboldt Merchant Services, RBS WorldPay,
Cardservice International, iPayment, Alliance Data, RapidAdvance, Accenture Consulting, Redwood Merchant Services, Chase Paymentech, as well as
other top financial institutions and ISOs.
Over the last three years, TSG has provided services to 30 of the top 40 U.S. Acquirers and has completed over 300 projects for more than 175 different
clients. TSG has recently performed Transaction Due Diligence Services for financial institutions including Goldman Sachs, Comerica Bank, Prudential,
Brantley Partners, Claritas Capital, Arsenal Capital, Merrick Bank, and First National Bank.
The Strawhecker Group (TSG) was recently named Business Partner of the Year by the
Electronic Transactions Association (ETA) at their Annual Meeting and Expo in Las Vegas
on April 12. ETA is an international trade association which represents companies who
offer electronic transaction processing products and services. Other nominees for this
award included Discover, TSYS, National Processing Company (NPC) and Security Metrics.
Find out more at
www.TheStrawGroup.com and at
www.PaymentsPULSE.com
Confidential. For discussion purposes only.
© Copyright 2012. The Strawhecker Group. All Rights Reserved.