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The largest payment processors in the business have a significant say in the bottom line of many small businesses. So, why don’t more small business owners understand the impact of the numbers behind their merchant acquirers?
A merchant acquirer is a financial entity, frequently a bank, that provides the settlement infrastructure for credit and debit card transactions. They also represent the backend of popular payment processing platforms like PayPal, Square, and Stripe, which in turn provide middleman services between the business and the merchant acquirer.
Let’s dive into the impact of the largest payment processors on small business owners.
Table of Contents
- Key Highlights
- Credit Cards Are Increasingly Preferred For In-Person Transactions
- The 10 Largest Merchant Acquirers
- In-Person VS Online Trends
- The 10 Largest Card-Not-Present Merchant Acquirers By Purchase Volume
- Notes
Key Highlights
- Consolidation within the merchant acquirer industry has benefited some companies more than others
- Online transactions as a percentage of total transactions declined slightly from 2020 to 2021 but remained above pre-pandemic levels
- Credit cards are increasingly the payment method of choice for transactions
Credit Cards Are Increasingly Preferred For In-Person Transactions
| % of consumers who prefer credit cards for in-person transactions | % who prefer debit | % who prefer cash | |
|---|---|---|---|
| 2016 | 24% | 42% | 27% |
| 2017 | 29% | 42% | 24% |
| 2018 | 29% | 42% | 22% |
| 2019 | 29% | 42% | 23% |
| 2020 | 33% | 43% | 18% |
| 2021 | 32% | 44% | 19% |
| 2022 | 35% | 38% | 19% |
Source: Federal Reserve Bank of San Francisco
Debit cards remained the preferred payment method of choice for in-person payments in 2022, but credit cards are gaining.
The Federal Reserve Bank of San Francisco's 2023 Diary of Consumer Payment Choice found that credit cards were the preferred payment method for 35% of consumers for in-person transactions in 2022, up from 24% in 2016, with preferences for debit cards and cash decreasing over the same period.
| Cash | Credit | Debit | ACH | Mobile Payment App | Other | |
|---|---|---|---|---|---|---|
| 2016 | 31% | 18% | 27% | 10% | 1% | 13% |
| 2017 | 31% | 22% | 27% | 10% | 0% | 11% |
| 2018 | 26% | 23% | 28% | 11% | 0% | 11% |
| 2019 | 26% | 24% | 30% | 11% | 0% | 9% |
| 2020 | 19% | 27% | 28% | 12% | 3% | 11% |
| 2021 | 20% | 28% | 29% | 12% | 1% | 10% |
| 2022 | 18% | 31% | 29% | 13% | 1% | 9% |
Source: Federal Reserve Bank of San Francisco
The same report found that utilization appears to be following preference, with credit card transactions accounting for 31% of all transactions in 2022, up from 18% in 2016.
A study by PMNTS Intelligence and Elan,Credit Card Use During Economic Turbulence, found the top three reasons cited for preferring to use a credit card were reward program incentives, desire to improve one's credit score, and reduction in income.
The 10 Largest Merchant Acquirers
Under pressure from innovative payment processors offering more convenient and often more transparent merchant services to businesses, the merchant acquirer industry has consolidated over the past few years with longtime former heavyweights like First Data and Vantiv having since merged with other entities.
Consolidation has benefited some merchant acquirers more than others. Fiserv, for example, has experienced rapid growth and exceeded growth expectations in 2023. Others, however, aren't seeing the economy of scale hoped for.
JPMorgan Payments
Purchase Volume:$1.74 trillion (1st)
Transactions:31.81 billion (2nd)
JPMorgan Chase & Co, owner of the largest bank in the U.S., was the merchant acquirer for a jaw-dropping $1.74 trillion in purchase volume in 2021. Chase provides backend services for eCommerce payment processing giant, PayPal and processes transactions in over 160 countries and 120 currencies. In addition to providing direct payment processing services to corporations like Macy's and DoorDash, Chase also provides simplified services to small businesses through Chase Payment Solutions.
Fiserv
Purchase Volume:$1.59 trillion (2nd)
Transactions:34.05 billion (1st)
If there's been a winner in the consolidation frenzy of the past few years, it's Fiserv. With over 2 billion more transactions in 2021 than Chase, Wisconsin-based Fiserv handled the most card-based payments in the U.S. The corporation's acquisitions include First Data, owner of the popular Clover line of payment processing hardware, and the STAR interbank network. First Data was formerly one of America's largest merchant acquirers. Fiserv also serves as a backend for Citi, Santander, and Suntrust, which are included in the volumes above (note that PNC Merchant Services and Wells Fargo, which also utilize First Data, are not included here due to the nature of their agreements). Fiserv saw $17.7 billion in revenue in 2022, up 9.3% from 2021.
Worldpay from FIS
Purchase Volume:$1.56 trillion (3rd)
Transactions:31.02 billion (3rd)
Worldpay by FIS is the product of a series of mergers and acquisitions, but they haven't paid off as well as they have for Fiserv. Cincinnati-based FIS, formerly doing business as Vantiv, was once the largest payment processor by transaction volume. Despite the acquisition of Worldpay in 2019, the company hasn't been able to ascend back to those lofty heights. Despite a still-respectable third-place ranking, we won't likely see the "Worldpay from FIS" brand on this list for long, as FIS announced intentions to spin off its merchant activities into a separate company in 2023 after a $17.6 billion write-down, according to Reuters.
Wells Fargo
Purchase Volume:$734.61 billion (4th)
Transactions: 9.28 billion (5th)
Big Four bank Wells Fargo saw just under a 1% decrease in transaction volume from 2020 to 2021, but purchase volume increased almost 8% over the same period to over $734 billion. Like Chase, Wells Fargo has begun promoting merchant services scaled to small businesses with simplified flat-rate pricing. Wells Fargo provides merchant services through an agreement with First Data, which serves as its backend processor.
Global Payments
Purchase Volume:$673.79 billion, estimated (5th)
Transactions: 10.73 billion, estimated (4th)
Like many of the other merchant acquirers on this list, this incarnation of Atlanta-based Global Payments is the product of mergers, most recently with Evo Payments in 2022, and before that TSYS in 2019. Global Payments' customers include Volkswagen and Golden Corral. The acquirer saw just under $9 billion in revenue in 2022, up 5.3% from 2021. "Merchant solutions" accounted for 69% of the company's revenue.
Bank Of America
Purchase Volume:$456.48 billion (6th)
Transactions: 8.49 billion (6th)
Like the other Big Four banks on the list, Bank of America heavily invests in credit cards, including issuing and acquiring. Initially, Bank of America used First Data as a backend processor for its merchant services. This deal ended with Fiserv's acquisition of First Data. Bank of America now independently runs its own merchant services platform, coming in sixth in both purchase and transaction volume.
Elavon
Purchase Volume:$351.64 billion (7th)
Transactions: 3.07 billion (7th)
A subsidiary of U.S. Bancorp, Atlanta-based Elavon Inc. handles card transactions in over 30 countries, with a concentration in the US and Europe, having recently acquired Sage Pay. Elavon is the backend processor for popular brands like Costco Merchant Services.
PNC Merchant Services
Purchase Volume:$86.82 billion (8th)
Transactions: 560 million (13th)
PNC Merchant Services is the credit card processing and acquiring arm of PNC Bank. PNC is not currently a direct processor; it provides services through its partnership with Fiserv. As such, PNC customers will largely be using Fiserv hardware, including the Clover line of terminals, for their in-person processing.
Paysafe Group
Purchase Volume:$70.19 billion (9th)
Transactions: 1.01 billion (8th)
London-based Paysafe Limited offers eCommerce payment services internationally, having expanded its US footprint through the acquisition of Meritus Payment Solutions and Global Merchant Advisors in 2014. Paysafe also offers digital wallet services. Prominent Paysafe customers include Microsoft and Valve Corporation. Paysafe Limited's revenue hit just under $1.5 billion in 2022, up 0.6% from 2021.
Priority Technology Holdings
Purchase Volume:$62.27 billion (9th)
Transactions: 670 million (11th)
Georgia-based Priority Technology Holdings includes its three divisions, which cater to small business payments, B2B payments, and enterprise payments respectively. Priority's customers include Wells Fargo and Wix. Priority's revenue amounted to $663.64 million in 2022, up 29% from 2021.
In-Person VS Online Trends
| In-Person | Online | |
|---|---|---|
| 2016 | 92% | 8% |
| 2017 | 90% | 10% |
| 2018 | 88% | 12% |
| 2019 | 87% | 13% |
| 2020 | 80% | 20% |
| 2021 | 82% | 18% |
| 2022 | 81% | 19% |
Source: Federal Reserve Bank of San Francisco
According to findings by the Federal Reserve Bank of San Francisco, online purchases make up a steadily increasing percentage of total consumer payments. In recent years, that increase has typically been between 1 - 2% per year. The very notable exception is 2020, when COVID policy and consumer-related behavior led to an immediate 7% increase in online purchases. While this increase wasn't sustained into 2021, in-person purchases only recovered by 2%, effectively accelerating the existing trend.
With the pandemic in the rearview mirror, online'sshare of total consumer purchases increased by a more typical 1% from 2021 to 2022.
The 10 Largest Card-Not-Present Merchant Acquirers By Purchase Volume
Card-not-present (CNP) transactions include all those in which the credit card's information isn't captured through a secure swipe, dip, or tap in person at a credit card terminal.
| Acquirer | Transactions (billions) | % of 2021 |
|---|---|---|
| J.P. Morgan Payments | $1,181.69 | 67.90% |
| Wells Fargo | 642 | 87.40% |
| Worldpay from FIS | 470.85 | 30.10% |
| Elavon | 151.97 | 43.20% |
| Priority Technology Holdings | 35.19 | 56.50% |
| No. American Bancard | 27.82 | 52.40% |
| Paya | 20.37 | 83.30% |
| EVO Payments | 18.86 | 52.70% |
| TabaPay | 16.18 | 100.00% |
| Merrick Bank | 15.37 | 30.90% |
Source: Nilson Report 2023
As noted in the previous section, online consumer purchases fell from 2020 to 2021, which in turn is reflected in the breakdown of individual merchant acquirers' card-present (CP) versus card-not-present ratios.
JPMorgan Payments
CNP Purchase Volume: $1.18 trillion (1st)
% Of Total Volume:67.9%
JPMorgan tops the list for CNP transactions, with well over half its purchase volume coming from remote transactions in 2021, down slightly from 72% in 2020.
Wells Fargo
CNP Purchase Volume: $642 billion (2nd)
% Of Total Volume: 87.4%
Wells Fargo primarily handles remote transactions, with CNP transactions accounting for over 87% of its total purchase volume in 2021, down from 92% in 2020.
Worldpay Fom FIS
CNP Purchase Volume: $470.85 billion (3rd)
% Of Total Volume: 30.1%
Despite its relatively high CNP purchase volume, CNP transactions made up less than a third of Worldpay from FIS's total purchase volume in 2021. Interestingly, this number did not change much from the pandemic, down less than 1% from 2020.
Elavon
CNP Purchase Volume: $151.97 billion (4th)
% Of Total Volume: 43.2%
Card-not-present transactions account for a little under half of Elavon's purchase volume. As is the case with FIS, this is barely changed from 2020, down just 0.2%.
Priority Technology Holdings
CNP Purchase Volume: $35.19 billion (5th)
% Of Total Volume: 56.5%
A small majority of Priority Technology Holding's purchase volume came from CNP transactions in 2021, unchanged from 2020.
North American Bancard
CNP Purchase Volume: $27.82 billion (6th)
% Of Total Volume: 52.4%
Michigan-based North American Bancard (NAB) is the owner of the PayAnywhere mobile payments platform and the B2B payment gateway, PayTrace. CNP transactions accounted for just over half of NAB's purchase volume in 2021, down from 59% in 2020.
Paya
CNP Purchase Volume: $20.37 billion (7th)
% Of Total Volume: 83.3%
Recently acquired by Canadian payment processor Nuvei, Paya provides payment processing and B2B services to the healthcare, education, non-profit, government, and utility sectors. Paya's purchase volume primarily came from online transactions in 2021, down a little over 3% from 2020. Paya's revenue was $282.7 million in 2022, up 13% from 2021.
EVO Payments
CNP Purchase Volume: $18.86 billion (8th)
% Of Total Volume: 52.7%
Atlanta-based EVO Payments offers payment processing and other financial services in over 50 countries and 150 currencies. A little over half of EVO's purchase volume came from online payments in 2021, down from 58% in 2020. EVO Payments was acquired by Global Payments in 2023.
TabaPay
CNP Purchase Volume: $16.18 billion (9th)
% Of Total Volume: 100%
Founded in 2017, the relatively young TabaPay offers expedited B2B payments, with a focus on the banking and fintech industries. TabaPay's API offers international reach, as well as access to alternative payment methods like ACH and real-time payments.
Merrick Bank
CNP Purchase Volume: $15.37 billion (10th)
% Of Total Volume: 30.9%
Utah-based Merrick Bank offers custom merchant acquiring services to a number of industries, including wholesale and retail. A little under a third of Merrick Bank's purchase volume in 2021 came from CNP transactions, down from 36% in 2020.
| Acquirer | Transactions (millions) | % of 2021 |
|---|---|---|
| J.P. Morgan Payments | 19,384.20 | 60.90% |
| Worldpay from FIS | 8,105.20 | 26.10% |
| Wells Fargo | 7,947.70 | 85.70% |
| Elavon | 803.9 | 26.20% |
| No. American Bancard | 299 | 40.80% |
| Esquire Bank | 212.1 | 49.00% |
| Merrick Bank | 170.2 | 22.80% |
| TabaPay | 156.3 | 100.00% |
| Priority Technology Holdings | 141 | 21.20% |
| Santander Merch. Serv. | 95.3 | 21.20% |
Source: Nilson Report 2023
Notes
Data for tables is sourced from the 2023 Nilson Report, Federal Reserve Bank of San Francisco, and company disclosures from 2023.
