The 25 biggest U.S. merchant acquirers control about 90% of payment dollar volume, even as e-commerce may be losing some of its recent momentum, according to the latest ranking of U.S. merchant acquirers by The Strawhecker Group, released this week.
Overall, U.S. acquirers processed more than $9 trillion in payment volume last year, according to the 2022 Directory of U.S. Merchant Acquirers, led by number-one ranked JPMorgan Chase, with $1.89 trillion in volume. The annual report, which this year ranked more than 320 acquirers, showed an estimated $6 trillion in volume concentrated among the five biggest processors. What distinguishes these five, according to Strawhecker’s new release about the report, is that “All … of these players have a strong bank sales channel, as they are either bank-owned or have an exceedingly large set of bank partners/clients from other areas of their business.”
But that’s not to say fast-growing upstarts aren’t breaking into higher levels of volume. Both Block Inc. (formerly Square) and Stripe Inc., both founded within the last 14 years, are getting close to the top 10. They ranked 11th and 12, respectively, for 2021. Adyen NV, founded in 2006 and an early player in what is now a booming market for buy now, pay later activity, climbed from 10th in 2020 to eighth place.
Altogether, a number of major acquirers enjoyed volume growth that exceeded the combined average 23.5% payment volume growth reported for 2021 by Mastercard Inc. and Visa Inc. These include Adyen, Block, and Stripe, but also Elavon, FIS, Shift4, Shopify, and Toast, according to Strawhecker.
Overall, volume growth for the industry last year was more than double “the usually observed annual growth,” Strawhecker’s release says, comparing that 23.5% overall growth rate to a compound annual growth rate of approximately 9% in the decade through 2020, It’s also and far and away better than the 3.2% growth recorded in 2020 alone, according to the report.
But while the report attributes much of this heightened growth rate to recovery from the Covid pandemic, one key sector that benefited from that pandemic “may be starting to show signs of slowing,” according to the release, which cites U.S. Commerce Department figures indicating a 9.2% growth rate for e-commerce in the fourth quarter compared to the same period in 2020. By contrast, e-commerce dollar volume ballooned 31.9% from fourth-quarter 2019 to fourth-quarter 2020.
Still, some major e-commerce processors managed to shrug off this de-acceleration. “While the recent slowing of e-commerce growth has especially affected high-growth payment entities on Wall Street in the cases of companies such as Shopify and PayPal, these entities still grew at much higher rates than legacy incumbents from a payment-volume perspective,” Strawhecker’s release says.
In other data points, the report indicates fully 41% of the ranked acquirers market the Clover point-of-sale system from Fiserv Inc. Visa Inc.’s Authorize.net claims the most gateway connections among the ranked acquirers, with a 38% share. And 36% of the acquirers indicate they have more than one sponsor-bank relationship.