Tech
Written by John Heggestuen
2015-07-30T15:10:00Z
The rapid proliferation of digital technology is disrupting lots of different industries and there's no better evidence than in the payments industry.
Payments are fundamental to the entire way commerce operates — both online and off.
For many years the industry moved slowly, reliant on the decisions of just a handful of companies. But digital has not only brought increased speed to market for the plethora of startups vying for a share of the over $5 trillion dollars in annual US retail commerce. In many cases it's also allowed the commerce experience to be re conceived and created numerous greenfield opportunities.
Understanding this complex and rapidly evolving space can be challenging, but in anin-depth explainerfromBI Intelligencewe've made it simple. We offer a high-level look at the payments industry — how it functions, who the key players are, and the trends shaping the industry. We start by explaining payment-card processing, since the majority of consumer payments and transaction volume flow through this system. From there we take a look at how consumers' move to mobile devices is changing the way we pay, and which players stand to benefit.
Here are some of the key takeaways:
- The ecosystem for credit- and debit-card processing involves a complicated set of players interacting to process every transaction.Five types of players are involved: acquirers/processors, issuers, card networks, gateway providers, and independent sales organizations (ISOs).
- To process a typical transaction, three steps must occur: authorizing, batching, and funding.Each participant in this process takes a fee off of the total volume of a transaction.The remainder is deposited in a merchant's account.
- Three trends will shape the payment-card-processing ecosystem from 2015 onward:the EMV security migration, rapid development of new payment technologies, and the massive card-fraud problem in the US. While none of these developments will completely upend the incumbent system for processing payments, each will disrupt key players.
- The mobile point-of-sale (mPOS) is going to have a massive impact on the payments-hardware and payments-software industry.By 2019, we forecast that nearly 80% of US retailers will have implemented a mPOS device. The move to mPOS will continue to put pressure on hardware providers that compete directly against mPOS devices, as well as ISOs that sell legacy devices to merchants.
- While the payment-card-processing system as a whole isn't in danger, the proliferation of mobile devices will have a significant effect on the way we pay.
In full, the report:
- Provides 9 infographics and diagrams explaining how card transactions are processed and which players are involved in each step.
- Analyzes the key trends and and forces that will shape they payments industry going forward.
- Details how mobile is shaping 5 types of consumer payment technologies and which companies to watch for within each category.
Interested in getting the full report? Here's how you access it:
- Subscribe to anAll-Accesspass to BI Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensureyou stay ahead of the curve and benefit personally and professionally.» Learn MoreNow
PS. Did you know...
Our BI IntelligenceINSIDER Newsletters are currently read by thousands of business professionals first thing every morning. Fortune 1000 companies, startups, digital agencies, investment firms, and media conglomerates rely on these newsletters to keep atop the key trends shaping their digital landscape — whether it is mobile, digital media, e-commerce, payments, or the Internet of Things.
Our subscribers consider the INSIDER Newsletters a "daily must-read industry snapshot" and "the edge needed to succeed personally and professionally" — just to pick a few highlights from our recent customer survey.
With our full money-back guarantee, we make it easy to find out for yourself how valuable the daily insights are for your business and career.
Heggestuen is Vice President of Research for Business Insider Intelligence. He leads the research team, covering digital transformation in payments, fintech, IoT, transportation and logistics, digital media, apps and platforms, digital health, and digital commerce. Prior to his role as head of research, he launched Business Insider Intelligence's payments and fintech coverage as an analyst, leading teams in New York and London. Heggestuen is a regular speaker and moderator at leading industry events, including Money20/20, Money20/20 Europe, Mobile World Congress Americas, MoneyConf, IGNITION, and TRANSACT. In addition, his work has been cited by top media, including Good Morning America, CBS This Morning, Digiday, and Nieman Lab. He holds a M.Sc. Philosophy of the Social Sciences from the London School of Economics, and a B.A. in Political Science and Philosophy from California Lutheran University.Read his research here.
Read next
Newsletter
Invaluable intelligence, short and sweet. Get your daily dose of data! Sign up for the Chart of the Day newsletter.
Thanks for signing up!
Access your favorite topics in a personalized feed while you're on the go.
Advertisem*nt
