Article | October 26, 2017

The Evolved Acquirer – A Forecast For Weathering The Consolidation Storm

Source: Vantiv Integrated Payments

By Matt Downs, Head of Channel and Business Development, Integrated Payments, Vantiv

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The acceleration in acquisitions among the largest 50 payment processing providers in recent years has resulted in unprecedented consolidation within the merchant acquiring industry.  Since 2015, volume share among the top 10 acquirers in the current U.S. card processing market has consolidated by 3 percent; compared to 1988, it has consolidated over 40 percent. However, this market is not a zero sum game. Since 1988, card volume has continued to grow at a compound annual rate of 12 percent since 1988. What does all this mean? To weather the consolidation storm, today’s evolved acquirer has restructured their business model and now specializes to provide more value to their merchant clients through understanding the individualized needs of an industry.

The impetus behind the rise in consolidation within the merchant acquiring industry cannot be attributed to a single source but rather to an amalgamation of events. A proliferation of disruptive technologies, an ever-changing list of regulations, and new competitors and entrants eager to make their mark on the payments ecosystem all play a role in the consolidation. Add to this a steady rise in U.S. card acceptance fueled by organic economic growth (inflation and GDP), increased consumer usage driven, in part, by electronic payments making an inroads into traditionally check dominated industries, and increased merchant acceptance through emerging acceptance markets and micro-merchants. Pull it all together and a perfect storm is brewing, right? Nope. Not even close.