This report is a primer and overview of the payment processing and services ecosystem, summarizing the latest market share, growth and penetration trends for card-based payments worldwide. Specifically, the report includes:
- An overview of the payment processing services ecosystem and industry participants (i.e., who are the players and what services do they provide?) – a market sized by McKinsey to be at $900B in revenues.
- A look at the payment processing and services value chain and economic model of various sub-sectors, including fund flow diagrams of card-based payment transaction.
- A look at historical volume growth trends and penetration measures for domestic and international card markets, highlighting (1) solid mid-to-high single-digit growth ahead in the more mature U.S. market, and (2) faster double-digit growth overseas fueled by low penetration rates for many years to come. We believe processors must expand overseas and embrace new distribution channels (like integrated payments) to sustain growth. Nationalism, or the desire for local banks and regulators to reduce dependency on the U.S. networks by overseeing their own payment schemes, remains the biggest risk to the industry’s addressable market, in our view, aside from regulation.
- An analysis of the international “green field” opportunity, focusing on international markets that most resemble the U.S. (from a GDP per capita perspective) and the spread between mature and emerging market card-based penetration rates. We identified about a dozen key international countries that we think are the most immediate cash conversion opportunity.
- Market share breakdown of the payment networks, domestic acquirers, domestic credit and debit, domestic PIN-debit, prepaid, POS terminal providers and key issuers.
- A look at MasterCard and Visa’s purchase volume by product and region.
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