New Report from Aite Group Examines the State of the Merchant Acquiring Industry

Boston, MA - 26 November 2007

A new report from Aite Group, LLC provides an overview of the state of merchant acquiring in the U.S. market. The report looks at the impact of discount rates and interchange in the merchant acquiring space, reviews vendors, overviews sampled acquirers' portfolios and fraud and PCI DSS compliance, and considers the future of acquiring. The findings of the research are strongly directional and aim to provide solid insight and guidance for strategic decision-making.

The report, based on a phone/e-mail survey conducted by Aite Group between September and November of 2007, surveys 11 of the top 70 acquirers and ISOs in the United States and Puerto Rico, including a representative section of small to large acquirers and ISOs with a broad range of vertical coverage. It reveals that margin compression is the most important challenge facing merchant acquirers and ISOs today, with 73% of those surveyed ranking it among their top three leading concerns. As the industry enters a commoditization phase, more and more acquirers and ISOs feel that they have to engage in a price war in order to acquire potential customers or retain current ones. Further, the change will force acquirers and ISOs to focus on other revenue-generating factors, such as products and administrative fees.

"In order to survive in this rapidly changing space, acquirers and ISOs need to diversify their revenue sources and not rely on discount rates as their main source of revenue," says Adil Moussa, analyst with Aite Group and author of this report. "In addition to vendor solutions, the Internet could be a valuable transactional tool, and is currently underused. Web applications can be developed to aide in the acquisition process, cross-sell efforts, and to automate some operations like chargebacks, equipment returns, and set-up forms."

The report reviews the front- and back-end processors; chargeback, fraud, and reporting solutions; check verification and/or guarantee vendors; POS terminal and service vendors; and Internet gateway vendors used by acquirers and ISOs surveyed by Aite Group. These include Authorize.net, Fidelity National Information Services' Certegy, CrossCheck, Evertec, First Data's TASQ, Global Payments, Hypercom, Ingenico, VeriFone, The Phoenix Group, POS Portal, T-Tech, Trust Commerce, and TSYS.

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