Table of Contents
- Overview
- Executive Summary
- Merchant acquiring and transaction processing within Europe - key findings
- Belgium - key findings
- France - key findings
- Germany - key findings
- Italy - key findings
- The Netherlands - key findings
- Spain - key findings
- Turkey - key findings
- UK - key findings
- Table of Contents
- Table of figures
- Table of tables
- Introduction to Merchant Acquiring and Transaction Processing
- The term ' processing' refers to a variety of activities in the payment
process
- The payment process can involve a sizeable chain of participants
- The card holder
- The issuer
- The merchant
- The acquirer
- The transaction processor
- The scheme
- The payment service provider
- The term ' processing' refers to a variety of activities carried out by
third parties
- The merchant acquisition process involves varying numbers of players
- The transactional information process involves data flowing from the
merchant acquirer to the card issuer
- Costs are deducted throughout the transactional fund process
- The MSC is the fee paid by the merchant to the merchant acquirer
- The interchange fee is paid by the merchant acquirer to the issuer
- Some issuers work on a closed loop basis
- The processing value chain includes all activities necessary for card
payments to occur
- In order to avoid confusion, it is important to define the processing
value chain
- A European bank divides the value chain into policy and operational
functions
- The value chain is replicated on the issuing and acquiring sides
- European banks want to retain the relationship with the customer
- In the US, the value chain is less in the control of the banks
- The breakdown of traditional processing model is leading to a shift of
power in some markets
- Acquirers tend to outsource data processing activities
- Issuers tend to outsource a wider range of activities
- The processing side has consolidated more than the acquiring side
- Over time, the European value chain could start to emulate the
American model
- Merchant Acquiring and Transaction Processing within Europe
- The European market has been experiencing steady growth
- Pay now cards are prevalent in Europe
- Pay later cards
- The UK is the biggest payment card market in Europe
- Card penetration is also highest in the UK
- The acquiring landscape is well developed throughout the region
- The acceptance infrastructure has steadily expanded
- Cash continues to be the most commonly accepted payment method
- Lack of demand and small business size are two major reasons why
cards are not accepted by more merchants
- Minimum transaction values for card payments are fairly common on
average
- Charges for Master Card usage are imposed by around 2.9% of respondents
- Discounts on payments and loyalty programs are the key to encouraging
card payments
- Barclays is the leading acquirer in the aggregate market
- Merchants are typically satisfied with their acquiring services
overall
- SEPA presents both challenges and opportunities to market players
- Processors plan to take advantage of the new structure
- Most issuers are not concerned by a potential fall in revenue from
international transactions
- Domestic schemes are likely to survive for the moment
- The possible reduction of the multilateral interchange fee could see
issuer revenues fall in certain markets
- Merchants want the components of interchange to be unbundled and
reflect costs more accurately
- Merchants argue that the high costs of interchange are to detriment
of consumers, as they are forced to pass the charges on in the form of
higher retail prices
- The industry argues that the current setup balances the cost of the
industry over those who benefit
- Levels of interchange and MSC have already been subject to domestic
regulation in many markets - the general consensus is they are set to
fall further
- Domestic regulators are pushing to make interchange a more accurate
reflection of costs, possibly reducing them to as low as 0.04%
- Cuts in interchange will see costs cut and revenue recouped elsewhere,
leading to a fall in consumer welfare
- A reduction of interchange in Australia gives an indication of the
results of a similar cut in Europe
- Issuers face two options in the face of falling levels of interchange
- Option one: fight the reduction in interchange
- Option two: rethink pricing strategies in order to cope with a
reduction in interchange
- Belgium
- The Belgian market was worth -59.8 billion in 2006
- Pay now cards are dominant in Belgium
- Pay later cards are less important in Belgium
- The Belgian cards market is forecast to grow at a CAGR of 5.4% to 2011
- Banksys is central to the Belgian processing landscape
- Banksys dominates processing in Belgium
- ATOS Origin also acquired Bank Card Company, a major merchant acquirer
- The acquiring landscape is dominated by Banksys
- There is one POS terminal for every 90 people in Belgium
- Levels of acceptance in the Belgian card market
- Lack of demand, and expense are two major reasons that cards are not
accepted by more merchants
- Minimum transaction values for card payments are relatively rare in
Belgium
- The application of minimum transaction thresholds for cards is
stronger in certain sectors
- Charges for credit card usage are imposed by around 2.5% merchants in
Belgium
- Increasing security and efficiency are the key to encouraging card
payments
- Banksys is the dominant acquirer in Belgium
- Belgian merchants are typically satisfied with their acquiring
services
- France
- The French market was worth -334 billion in 2006
- Pay now cards are less important in France
- Pay later cards dominate the French market
- The French cards market is forecast to grow at a CAGR of 7.1% to 2011
- The processing landscape is governed by Cartes Bancaires
- Processing is typically kept in-house
- The French acquiring land scape is dominated by Crédit Agricole
- There is one POS for every 55 people in France
- Levels of acceptance in the French card market
- Lack of demand and small business size are two major reasons why
cards are not accepted by more merchants
- Minimum transaction values for card payments are relatively common in
France
- Minimum transaction value thresholds for payments are common for
around a quarter of card payments
- Charges for debit card usage are imposed by around 1.8% of respondents
in France
- Increasing security and efficiency are the keys to encouraging card
payments
- Merchant acquiring is controlled by Cartes Bancaires
- Crédit Agricole is the dominant acquirer in France
- French merchants are typically satisfied with their acquiring services
- Germany
- The German market was worth -475 billion in 2006
- Pay now cards are dominant in Germany
- Pay later cards are relatively rare in Germany
- The German cards market is forecast to grow at a CAGR of 4.7% to 2011
- The German processing landscape is dominated by First Data and ATOS
- Acquiring in Germany is dominated by Volksbank
- There is one POS for every 142 people in Germany
- Levels of acceptance in the German card market
- Expense and small business size are two major reasons why cards are
not accepted by more merchants
- Minimum transaction value thresholds for payments are fairly uncommon
in Germany
- The application of minimum transaction thresholds for cards is
stronger in certain sectors
- Charges for credit card usage are imposed by around 2.5% of merchants
in Germany
- Increasing efficiency and security are key to encouraging card payments
- Volksbank is the dominant acquirer in Germany
- The large majority of German merchants are satisfied with their
acquiring services
- Italy
- The Italian market was worth -176 billion in 2006
- Pay now cards are dominant in Italy
- Pay later cards are less important in Italy
- The Italian cards market is forecast to grow at a CAGR of 7.3% to 2011
- Acquirers typically outsource processing to SIA-SSB
- Acquiring in Italy is dominated by Banca Popolare
- There is one POS terminal for every 52 people in Italy
- Levels of acceptance in the Italian card market
- Business size and expense are two major reasons why cards are not
accepted by more merchants
- Minimum transaction values for card payments are relatively rare in
Italy
- Charges for credit card usage are imposed by around 1.3% of merchants
in Italy
- Offering discounts and improving security are key to encouraging card
payments
- Banca Popolare is the dominant acquirer in Italy
- Italian merchants are typically satisfied with their acquiring
services
- The Netherlands
- The Dutch market was worth -138.9 billion in 2006
- Pay now cards are dominant in the Netherlands
- Pay later cards are very uncommon in the Netherlands
- The Dutch cards market is forecast to grow at a CAGR of 4.3% to 2011
- Processing in the Netherlands is dominated by Equens
- Acquiring in the Netherlands is dominated by Interpay
- Infrastructure
- Levels of acceptance in the Dutch card market
- Lack of demand and expense are two major reasons why cards are not
accepted by more merchants
- Minimum transaction value thresholds for payments are fairly uncommon
in the Netherlands
- The application of minimum transaction thresholds for cards is
stronger in certain sectors
- Charges for credit card usage are imposed by around 5.5% of respondents
- Decreasing the cost of using cards and increasing security are key to
encouraging card payments
- Interpay is the dominant acquirer in the Netherlands
- Dutch merchants are typically satisfied with their acquiring services
- Spain
- The Spanish market was worth -204 billion in 2006
- Pay now cards are common in Spain
- Pay later cards are less common in Spain
- The Spanish market is forecast to grow at a CAGR of 8% to 2011
- There are three major inter bank associations in Spain
- Acquiring in Spain is dominated by BBVA
- There is one POS for every 34 people in Spain
- Lack of demand and expense are two major reasons why cards are not
accepted by more merchants
- Minimum transaction values for certain card payments are widespread in
Spain
- The application of minimum transaction thresholds for cards is
stronger in certain sectors
- Charges for credit card usage are imposed by only 0.5% of merchants in
Spain
- Discounts on card payments and loyalty programs are the key to
encouraging card payments
- BBVA is the dominant acquirer in Spain
- Spanish merchants are typically satisfied with their acquiring
services
- Turkey
- The Turkish market was worth -115.7 billion in 2006
- Pay now cards in are just in the majority in Turkey
- Pay later cards account for just under half of all cards in issue in
Turkey
- The Turkish cards market is forecast to grow at a CAGR of 17.9% to 2011
- The processing landscape is under the control of BKM
- Acquiring is dominated by Isbank
- There is one POS for every 55 people in Turkey
- Levels of acceptance in the Turkish card market
- Lack of demand and small business size are two major reasons why
cards are not accepted by more merchants
- Minimum transaction value thresholds for payments are uncommon in Turkey
- The application of minimum transaction thresholds for cards is
stronger in certain sectors
- Charges for credit card usage are imposed by around 0.7% of merchants
in Turkey
- Loyalty programs and greater promotion are key to encouraging card
payments
- Isbank is the dominant acquirer in Turkey
- Turkish merchants are typically satisfied with their acquiring
services
- UK
- The UK market was worth -749 billion in 2006
- Pay now cards are prevalent in the UK
- Pay later cards are slightly less common in the UK
- The UK cards market is forecast to grow at a CAGR of 6.6% to 2011
- Banks in the UK tend to outsource most non-core activities
- Acquiring in the UK is dominated by Barclays
- There is one POS for every 58 people in the UK
- Levels of acceptance in the UK card market
- Lack of demand and small business size are two major reasons why
cards are not accepted by more merchants
- Minimum transaction value thresholds are quite common for card payments
in the UK
- The application of minimum transaction thresholds for cards is
stronger in certain sectors
- Charges for credit card usage are imposed by around 8.5% merchants in UK
- Introducing loyalty programs and decreasing card usage are key to
encouraging card payments
- UK merchants are typically satisfied with their acquiring services
- Appendix
- Supplementary data
- Definitions
- AAGR
- APACS
- Average transaction value
- Balances outstanding
- Bank of England base rate
- CAGR
- Charge card
- Credit card
- CVV
- Debit card
- EMV
- Fraudulent use of card details (card-not-present fraud),also known as
fraud on phone, mail order or internet transactions
- Interchange
- Non-standard
- OFT
- Methodology
- Primary research
- Secondary research
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- List of Tables
- Table 1: Merchant Service Charges across eight European markets, 2004-2008
- Table 2: Proportion of cards with minimum transaction spend by sector,
Belgium, 2006
- Table 3: Proportion of cards with minimum transaction spend, by sector,
France, 2006
- Table 4: Proportion of cards with minimum transaction spend, by sector,
Germany, 2006
- Table 5: Proportion of cards with minimum transaction spend, by sector,
Netherlands, 2006
- Table 6: Proportion of cards with minimum transaction spend, by sector,
Spain, 2006
- Table 7: Proportion of cards with minimum transaction spend, by sector,
Turkey, 2006
- Table 8: Proportion of cards with minimum transaction spend, by sector,
UK, 2006
- Table 9: Number of payment cards in eight European markets
- Table 10: Number of transactions on payment cards in eight European
markets
- Table 11: Value of transactions on payment cards in eight European markets
- Table 12: Number of POS terminals in eight European markets
- Table 13: Current relevant Datamonitor publications,2008
- Table 14: Future relevant Datamonitor publications, 2008
- List of Figures
- Figure 1: Issuers often outsource non-core activities to processors
- Figure 2: The transactional information process, 2008
- Figure 3: Card issuers, processors and acquirers all take their share of
the MSC
- Figure 4: Value is added to the chain at several points throughout the
payment process
- Figure 5: The value chain is replicated on the issuing and acquiring side
- Figure 6: In the US, the value chain has disintegrated into several
separate parts
- Figure 7: The value of transactions in the markets measured has grown
steadily, 2002-2006
- Figure 8: The aggregate pay now market has seen healthy growth, 2002-2006
- Figure 9: The aggregate pay later market has seen healthy growth,
2002-2006
- Figure 10: In terms of transaction value, the UK has the largest market
for payment cards
- Figure 11: The UK has the highest payment card penetration at 2.8 cards
per person
- Figure 12: The aggregate payment market is forecast to slow over the
following four years
- Figure 13: The number of POS terminals in the aggregate market has
increased steadily between 2002 and 2006.
- Figure 14: Germany has the highest population per POS terminal
- Figure 15: Cash is the most commonly accepted payment type, 2006
- Figure 16: Lack of customer demand and small business size are two major
reasons why merchants do not accept cards
- Figure 17: Minimum transaction values are most commonly imposed on credit
card transactions, 2006
- Figure 18: On average Master Card credit cards most frequently attract
charges, 2006
- Figure 19: Discounts on card payments are seen as a keyway to encourage
card use
- Figure 20: Barclays is the leading acquirer in Europe
- Figure 21: Merchants are typically very satisfied with the service they
receive from their acquirers
- Figure 22: The interchange fees levied by Australian card schemes, 2004
- Figure 23: Australian issuers increased annual fees in response to a cut
in interchange, 2002 & 2003
- Figure 24: The Belgian market has grown at a CAGR of 8.5% from 2002 to
2006
- Figure 25: The pay now market in Belgium has seen healthy growth in the
2002 to 2006 period
- Figure 26: Growth in the Belgian pay later market has been much more
subdued, 2002-2006
- Figure 27: The rate of growth in the Belgian cards market is expected to
slow, 2002-2011
- Figure 28: The number of POS terminals in Belgium has fallen, 2002-2006
- Figure 29: Cash is still the most commonly accepted payment type in
Belgium, 2006
- Figure 30: Lack of customer demand and expense are two major reasons why
merchants do not accept cards in Belgium
- Figure 31: Minimum transaction values are most commonly imposed on credit
card transactions, Belgium, 2006
- Figure 32: Visa credit cards most frequently attract charges in Belgium,
2006
- Figure 33: Increasing security is seen as a key way to encourage card
use, Belgium, 2006
- Figure 34: Banksys is the prevalent merchant acquirer in Belgium
- Figure 35: Belgian Acquirers are typically satisfied with the service
they receive from merchant acquirers
- Figure 36: The French market has grown at a CAGR of 8.6% from 2002 to 2006
- Figure 37: The pay now market in France has seen healthy growth in the
2002 to 2006 period
- Figure 38: The French pay later market has grown at a similar rate to the
pay now market, 2002-2006
- Figure 39: The rate of growth in the French cards market is expected to
slow, 2002-2011
- Figure 40: The table of figures is an optional section and can be removed
- Figure 41: The number of POS terminals in France has increased steadily
between 2002 and 2006.
- Figure 42: Cheques are the most commonly accepted payment type in France,
2006
- Figure 43: Lack of customer demand and small business size are two major
reasons why merchants do not accept cards in France
- Figure 44: Minimum transaction values are most commonly imposed on debit
card transactions, France, 2006
- Figure 45: Visa credit cards most frequently attract charges in France,
2006
- Figure 46: Increasing security is seen as a key way to encourage card
use, France, 2006
- Figure 47: Credit Agricole is the prevalent merchant acquirer in France
- Figure 48: French acquirers are typically very satisfied with the service
they receive from merchant acquirers
- Figure 49: The German market has grown at a CAGR of 8.7% from 2002 to 2006
- Figure 50: The pay now market in Germany has seen healthy growth in the
2002 to 2006 period
- Figure 51: The pay later market in Germany has seen healthy growth in the
2002 to 2006 period
- Figure 52: The rate of growth in the German cards market is expected to
slow, 2002-2011
- Figure 53: The number of POS terminals in Germany has increased steadily
between 2002 and 2006.
- Figure 54: Cash is still the most commonly accepted payment type in
Germany, 2006
- Figure 55: Expense and business size are two major reasons why merchants
do not accept cards in Germany
- Figure 56: Minimum transaction values are most commonly imposed on credit
card transactions, Germany, 2006
- Figure 57: Master Card credit cards most frequently attract charges in
Germany, 2006
- Figure 58: Increasing efficiency is seen as a key way to encourage card
use, Germany, 2006
- Figure 59: Volksbank is the prevalent merchant acquirer in Germany, 2006
- Figure 60: The large majority of German merchants are satisfied with
their acquiring services
- Figure 61: The Italian market has grown at a CAGR of 4% from 2002 to 2006
- Figure 62: The pay now market in Italy has seen healthy growth in the
2002 to 2006 period
- Figure 63: The pay later market in Italy has seen healthy growth in the
2002 to 2006 period
- Figure 64: The rate of growth in the Italian cards market is expected to
accelerate, 2002-2011
- Figure 65: SIA-SSB provides a full range of outsourcing to the Italian
market
- Figure 66: The number of POS terminals in Italy has increased
significantly between 2002 and 2006.
- Figure 67: Cash is still the most commonly accepted payment type in
Italy, 2006
- Figure 68: Lack of customer demand and not being accepted by an acquirer
are two major reasons why merchants do not accept cards in Italy
- Figure 69: Minimum transaction values are most commonly imposed on debit
card transactions, Italy, 2006
- Figure 70: Domestic debit cards most frequently attract charges in Italy,
2006
- Figure 71: Offering discounts on card purchases is seen as a key way to
encourage card use, Italy, 2006
- Figure 72: Banca Popolare is the prevalent merchant acquirer in Italy,
2006
- Figure 73: Italian merchants are typically satisfied with their acquiring
services
- Figure 74: The Dutch market has grown at a CAGR of 13.3% from 2002 to 2006
- Figure 75: The pay now market in the Netherlands has seen strong growth
in the 2002 to 2006 period
- Figure 76: The pay now market in the Netherlands has seen strong growth
in the 2002 to 2006 period
- Figure 77: The rate of growth in the Dutch cards market is expected to
slow, 2002-2011
- Figure 78: The number of POS terminals in the Netherlands has increased
steadily between 2002 and 2006.
- Figure 79: Cash is still the most commonly accepted payment type in the
Netherlands, 2006
- Figure 80: Lack of customer demand and expense are two major reasons why
merchants do not accept cards in the Netherlands
- Figure 81: Minimum transaction values are most commonly imposed on debit
card transactions, the Netherlands, 2006
- Figure 82: Visa credit cards most frequently attract charges in the
Netherlands, 2006
- Figure 83: Decreasing the cost of using cards is seen as a key way to
encourage card use, Netherlands, 2006
- Figure 84: Interpay is the prevalent merchant acquirer in the Netherlands
- Figure 85: Dutch Acquirers are typically satisfied with the service they
receive from merchant acquirers
- Figure 86: The Spanish market has grown at a CAGR of 12.5% from 2002 to
2006
- Figure 87: The pay now market in Spain has seen healthy growth in the
2002 to 2006 period
- Figure 88: The pay now market in Spain has shown strong growth in the
2002 to 2006 period
- Figure 89: The rate of growth in the Spanish cards market is expected to
slow, 2002-2011
- Figure 90: The number of POS terminals in Spain has increased steadily
between 2002 and 2006.
- Figure 91: Cash is still the most commonly accepted payment type in
Spain, 2006
- Figure 92: Lack of customer demand and expense are two major reasons why
merchants do not accept cards in Spain
- Figure 93: Minimum transaction values are most commonly imposed on credit
card transactions, Spain, 2006
- Figure 94: Visa credit cards most frequently attract charges in Spain,
2006
- Figure 95: Discounts are seen as a key way to encourage card use, Spain,
2006
- Figure 96: BBVA is the prevalent merchant acquirer in Spain
- Figure 97: Spanish merchants are typically satisfied with the service
they receive from merchant acquirers
- Figure 98: The Turkish market has grown at a CAGR of 29.9% from 2002 to
2006
- Figure 99: The pay now market in Turkey has seen strong growth in the
2002 to 2006 period
- Figure 100: Growth in the Turkish pay later market has been much
stronger, 2002-2006
- Figure 101: The rate of growth in the Turkish cards market is expected to
slow, 2002-2011
- Figure 102: The number of POS terminals in Turkey has grown steadily
between 2002 and 2006.
- Figure 103: Cash is still the most commonly accepted payment type in
Turkey, 2006
- Figure 104: Lack of customer demand and small business size are two major
reasons why merchants do not accept cards in Turkey
- Figure 105: Minimum transaction values are most commonly imposed on
credit card transactions, Turkey, 2006
- Figure 106: MasterCard credit cards most frequently attract charges in
Turkey, 2006
- Figure 107: Loyalty programs are seen as a key way to encourage card use,
Turkey, 2006
- Figure 108: Isbank is the prevalent merchant acquirer in Turkey
- Figure 109: Turkish merchants are typically satisfied with the service
they receive from acquirers
- Figure 110: The UK market has grown at a CAGR of 10.5% from 2002 to 2006
- Figure 111: The pay now market in the UK has seen strong growth in the
2002 to 2006 period
- Figure 112: The pay now market in the UK has seen strong growth in the
2002 to 2006 period
- Figure 113: The rate of growth in the UK cards market is expected to
slow, 2002-2011
- Figure 114: The number of POS terminals in the UK has increased steadily
between 2002 and 2006.
- Figure 115: Cheques are the most commonly accepted payment type in UK,
2006
- Figure 116: Lack of customer demand and small business size are two major
reasons why merchants do not accept cards in the UK
- Figure 117: Minimum transaction values are most commonly imposed on
credit card transactions, UK, 2006
- Figure 118: MasterCard and Visa credit cards most frequently attract
charges in the UK, 2006
- Figure 119: Loyalty programs are seen as a key way to encourage card use,
UK, 2006
- Figure 120: Barclays is the prevalent merchant acquirer in the UK
- Figure 121: UK merchants are typically satisfied with the service they
receive from merchant acquirers
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