At the moment the Irish
acquiring market is undergoing some significant changes, with new contracts and
moves across the industry. It is
certainly poised for a shake-up of some sort.
To my mind this market
broadly divides into three – physical, DCC and online. I have blogged before
about DCC and will discuss the online world shortly; my focus in this
blog is the changes in the physical acquiring market. The main players here
include AIB Merchant Services, Elavon, Streamline, World Pay and Barclaycard.
Market share stats
are hard to come by for the Irish acquiring market, however it is likely that
AIB MS and Elavon have the largest share of the market between them – somewhere
around 70%-80%. These market positions
are primarily driven by the main bank partner business banking shares – AIB are
JV partners in AIB MS and Elavon have had a 11 year exclusive referral deal
with Bank of Ireland, since BoI exited the Euroconex JV back in 2003.
The big development
this year is the retendering of the BoI merchant acquiring business to the
market. Should Elavon not be successful in winning a renewed contract, it’s likely
that this reasonably static market will see some significant change. BoI will
be very careful about who they grant access to their business banking base so
that rules AIB MS out straight away. If Elavon don’t win this business again
there will be change.
At AIB MS, a JV
between AIB / First Data, there are plans to drive the business more
aggressively. David Courtney, an experienced financial services executive with
a strong marketing background, has recently taken over as GM and is likely to
be instrumental in driving this business forward.
Other niche players
are also starting to make some inroads. For example, Irish company Blue Sky
Payments, which is gaining market share on the domestic front by undercutting competitors
and offering something different. Earlier this year, they announced a strategic
partnership with VeriFone Systems to provide VeriFone payments terminals to
businesses in Ireland. The partnership
will also involve collaboration in terms of offering customer services and
support for the payments terminals, as well as support with sales, marketing,
provision and procurement.
Similarly, Irish-owned
Stripe Payments, which launched in Ireland at the end of last year, offers
businesses an instant setup and straightforward pricing model for card
processing services with no monthly fees, minimums, or any other charges.
However, there are
areas that require further development and could definitely be exploited. Change
from the customers’ perspective would be refreshing- the market is suffering
from a lack of innovation and new products.
For example, the whole area of smartphones and credit cards. It never fails to surprise me that we still
don’t have a robust offering where consumers or sole traders can process credit
card transactions through their smartphone.
I have yet to see any mobile merchant, like a plumber or gardener be
equipped with hand held acquiring devices, which are common in the UK. With smartphone penetration in Ireland at 57%
and on the rise, this would offer an ideal hassle-free, low-volume solution for
smaller retailers and consumers.
In addition, the
quality of acquiring terminals in many locations leaves a lot to be desired (as
a card nerd I check these things!). There
are plenty of opportunities for a new or dynamic incumbent to chase market
share via the BoI business.
The market is
attractive. Figures indicate positive
and continued growth with card usage increasing globally and projected card
transaction volumes to reach US$21.9tn by 2015.
I believe that the credit card market will start to grow again after the
retrenchment of the past few years. With moves afoot to also launch some mass
market prepaid cards, this market is ripe for growth. In the Irish context, there has been massive
growth in debit cards over the past few years - a 10% growth to 341 million purchases and a
14% rise in the value of debit card sales to €17.6bn last year — up from 309
million and €15.4bn respectively in 2012.
One of the big strategic
challenges facing the industry is the proposed EU regulations on
interchange. Issuer rates are due to
fall substantially over the next few years, I strongly believe that this income
will primarily migrate to acquirers … if their pricing and structures are smart
enough to capture it. The question remains, who will seize these opportunities
amongst existing and new acquirers, and how will this impact the industry
overall? Will the gap resulting from the
end of the Elavon/BoI deal entice a new player into the market?
I’ll be watching with
interest to see what emerges.
To discuss any payment related issues, you can contact
me on kevin@colthurst.ie or + 35386 2319 484
Sources:
Nielsen
Report Issue 983, Forrester e-commerce research and
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