What do you get when you add 4 and 11? In the case of Worldpay Inc., it’s 1. The merged version of the former Vantiv Inc. and Worldpay plc moved to the number-one position in The Strawhecker Group’s annual directory of U.S. merchant acquirers.
Released Monday, the directory ranks industry participants by their estimated total processing volume in 2017. Vantiv, number 4 last year, and Worldpay, number 11, merged in January, adopting the Worldpay name for the company. The merger moved the company to the top spot, with an estimated $1.12 trillion in U.S. processing volume. The new Worldpay serves an estimated 1.2 million merchants across the globe, according to the 2017 documents related to the merger.
The lineup for the other top 10 U.S. merchant acquirers held steady, with JPMorgan Chase & Co.’s Chase Commerce Solutions in the second spot at $1.1 trillion, followed by Bank of America Merchant Services, $780 billion; First Data Corp., $410 billion; Wells Fargo Merchant Services, $400 billion; Elavon, $300 billion; Citi Merchant Services, $215 billion; Global Payments Inc. (excluding its Heartland Payment Systems and OpenEdge units), $215 billion; Heartland Payment Systems, $140 billion; and Total System Services Inc. (TSYS), $125 billion.
These top 10 companies still control 80% of processing volume, says Jared Drieling, senior director of business intelligence at the Omaha, Neb.-based consultancy. “There’s still not a lot of movement in the top 10,” he says.
But that doesn’t mean the industry isn’t changing or offering opportunities, he says. “The secular trend is not slowing down,” Drieling tells Digital Transactions News. “The whole transition from cash and check is not slowing down.”
That trend continues to boost payment processors in the eyes of potential investors, he says. “Most observers consider there are not many greenfield opportunities for payments,” he says, but business-to-business payments, among others, are gravitating to electronic processing. Niche verticals such as day-care providers and funeral homes continue to see growth, he says.
The payments industry continues to cultivate the point-of-sale software-development industry, whether through integrations with third-party providers or by offering their own POS systems.
Among the most popular are Clover, the First Data POS system, and Poynt Co.’s smart POS terminal. Clover has wide potential because of First Data’s broad reach among U.S. merchants, Drieling says. “No other point-of-sale system appears to have as much support from the [independent sales organization] community,” the report notes.
As for Poynt, Drieling says its appeal is its easy connectivity to a POS system. “Poynt is a nice add-on mobile feature,” he says.
Technology adoption and payments integration are two of the trends that Drieling says make the industry attractive, especially as ways to get more merchants to accept electronic payments.
“There are many different channels these organizations use to get merchants onboard,” he says. Bank channels are very strong and bring in lots of merchants, but it’s through software or the integrated-software vendor channel where strong growth is coming from, he says.
On the flip side, the traditional ISO approach, where just merchant services with no value-added products are sold, is a dying model, Drieling says, “or at least a model that’s not growing when compared to the integrated channel.”