ETA, Goldman Sachs Research Release Annual Merchant Acquirer and ISO Survey
Research Finds New Entrants Positive for Industry as Mitigation Strategies Take Shape
WASHINGTON, DC – The Electronic Transactions Association (ETA), the trade association of the global electronic payments industry, and Goldman Sachs Global Investment Research, a leading provider of global industry research, this week released the findings of the second annual ETA-GS Merchant Acquirer and ISO Survey. Among key findings, the survey revealed merchant acquirers prefer to partner with new entrants to the electronics landscape; loyalty-based solutions lower attrition and open new revenue streams; and merchant acquirers have a positive outlook on the future of electronic payments, with 60 percent expecting volume growth to accelerate.
“ETA is at the forefront of an industry experiencing rapid change, and the findings of this second annual survey will help merchant acquirers, ISOs and POS solutions providers adapt and thrive in the competitive electronic payments industry,” said Jason Oxman, CEO of ETA. “The research will be invaluable for ETA members exploring new business opportunities as well as investors looking to enter this dynamic field.”
The survey asked 77 merchant acquirers, ISOs and point-of-sale (POS) solutions providers to address key risks to incumbent models, potential mitigation strategies and opportunities for further growth. The survey follows the December 2012 ETA/Goldman Sachs report, “Payments Deep Dive: A closer look at the threats and opportunities posed by new entrants,” which provided investment-sector analysis of new entrants in the payment space.
“The data and trends unveiled in this ETA-GS survey highlight growth opportunities in the industry,” Oxman said. “Incumbent companies are increasingly choosing to partner with new entrants in the market. The ETA is focused on helping the electronic payments industry to grow business and provide innovative services to merchants and consumers.”
Key findings of the ETA-GS Merchant Acquirer and ISO Survey – 2013 include:
- New entrants create opportunities for incumbent payments companies. Most respondents (90 percent) suggested new entrants represent only 25 percent of attrition, and only 10 percent of respondents believe new entrants will negatively impact pricing at the SME merchant level.
- Partnerships and value-added services are a key mitigation strategy. Forty percent of respondents preferred to partner with new entrants to mitigate risk, and merchant acquirers expect to offer many value added services over the next year, including mobile point-of-sale (mPOS), e-commerce and loyalty solutions.
- Loyalty solutions could improve retention and profitability. Most respondents see loyalty-based solutions and value-added services – such as targeted offers, advertising and coupons – could lower attrition or open new revenue streams. Merchants are willing to pay 2 to 4 times the merchant discount rate (MDR) for loyalty-based solutions.
- In the near term, POS appears more exposed to disruption. Most respondents believe terminal manufacturers are most at risk from new entrants and mPOS solutions.
- There is a favorable backdrop for 2H13 acceleration. The U.S. merchant acquiring and ISO community are positive about the 2H13 backdrop, with 60 percent of respondents expecting payment volume growth to accelerate and 38 percent expecting it to remain stable.
The full research report is available as a benefit to ETA members at www.electran.org. For more information about ETA and member benefits, please contact Del Baker at [email protected]. For media inquiries and more information on the ETA-GS Survey on New Entrants in Payments, please contact Meghan Cieslak at 202-677-7406 or [email protected]. For the latest in payments news be sure to visit ETA’s official Blog Trendsetters and follow them on Twitter @ElecTranAssoc.
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UPCOMING ETA EVENTS
International Acquiring Forum
Millennium Gloucester Hotel and Conference Center
London U.K.
September 17 – 19, 2013
2013 Strategic Leadership Forum
Montelucia Resort & Spa
Scottsdale, AZ
October 15 – 17, 2013
2014 ETA Annual Meeting & Expo
April 8-10, 2014
Mandalay Bay
Las Vegas, NV
ABOUT ETA
The Electronic Transactions Association is an international trade association representing more than 500 companies that offer electronic transaction processing products and services. ETA’s mission is to advance the payments industry profession by providing leadership through education, advocacy and the exchange of information.
For more information on ETA, contact Del Baker at [email protected].