New Frontiers in Merchant Services: Acquirers and the pursuit of added value

New Frontiers in Merchant Services: Acquirers and the pursuit of added value

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New Frontiers in Merchant Services: Acquirers and the pursuit of added value

by Peter Kinahan

The global merchant services business may have a lower profile than the issuing side of the electronic payments industry but its capacity for consistent revenue generation is considerable as global billed volume rises relentlessly.

While margins from merchant service discounts are coming under pressure – notably in developed markets – many lucrative regions and markets remain fertile grounds for investment.

Meanwhile, the march of technology, in particular the arrival in force of the mobile device and the growth of e-commerce/m-commerce, has shaken the traditional order as acquirers look increasingly to incorporate value-added merchant services to their product offering to diversify and compensate for falling margins.

New Frontiers in Merchant Services describes the forces affecting the merchant services industry; forces that are leading both to increasing consolidation as acquirers recognise the prerequisite of scale in successful acquiring business models together with the arrival of niche innovators in the wider merchant services arena whose cumulative effect is challenging this once predictable business. The report offers an analysis of key regions, markets and player strategies in the face of an unprecedented period of industry turbulence.

New Frontiers in Merchant Services deconstructs the mechanics of the industry to reveal a world where specialists and operators of scale will increasingly hold sway.

Yet while certain trends such as falling interchange rates and associated merchant service charges are fairly universal, the world of merchant services is certainly not a homogenous one, with massive diversity in terms of individual market structures and metrics.

New Frontiers in Merchant Services analyses:

-  How interchange rates and associated merchant discount rates are coming under increased pressure in various markets throughout the world;

-  Why regulators in the US, Europe and beyond are exercising increasing influence on the merchant services and wider payments industry;

-  Merchant services’ contribution to the overall profitability of the payments industry;

-  The ways in which the leading players are executing their international strategies and which markets show the greatest promise;

-  How the online world has caught traditional players by surprise opening doors for new payment services providers;

-  The impact of the smartphone and the mobile wallet;

-  Why the various parties to the payments value chain – and acquirers in particular – are harnessing the power of data in the quest for incremental mobile commerce revenues;

-  The extent to which value-added services can go to supplement core transaction processing and discount revenues.


About the author

Peter Kinahan is senior researcher at Lafferty Group with responsibility for undertaking major research studies.

He has been involved with the company since the early 1990s when he was group editor - banking, responsible for editing titles such as Retail Banker International, Cards International and European Banker.

He was formerly markets editor with the Sunday Business Post, Ireland’s leading financial, political and economic newspaper.

He has worked extensively in financial eLearning with some of the world’s largest banking groups and he specialises in web-based marketing interventions based around customer education and financial literacy for the financial services industry.

Release date: November 2012

Pages: 110

About Lafferty Group

Lafferty Group is a major provider of advanced knowledge services for the financial industry worldwide, with particular specialisations in the fields of retail banking, cards & payments and central banking.

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