As demand for products and services rises, transaction volumes will increase
Los Angeles, CA (PRWEB) March 03, 2012
Despite an uncertain economy and decreases in disposable income, the Credit Card Processing and Money Transferring industry has been able to sustain revenue throughout the recession. According to IBISWorld industry analyst Eben Jose, “the recession set back industry revenue, but the large-scale implementation and popularity of electronic payment technology has provided the industry with a solid foundation for revenue growth.” The industry mainly generates revenue through data processing and international transactions fees. Therefore, while the volume of transactions decreased during the recession, the ratio of electronic payments to cash or check methods actually increased. As a result, in the five years to 2012, IBISWorld estimates industry revenue will rise at an average annual rate of 0.4% to $46.5 billion.
Nevertheless, the industry's reliance on transaction volumes and the value of noncash payments makes it susceptible to fluctuations in the general economy. Consequently, industry revenue declined as the recession began in 2008. During this period, revenue dipped 0.8% to $45.2 billion as the real estate bubble burst, credit markets tightened and the United States spiraled into a recession. Jose says, “the downward trend worsened in 2009, with revenue falling a further 3.4% because of lower transaction volumes and increased competition among operators.” The top four major companies, American Express Company, Kohlberg Kravis Roberts & Co., Visa USA and MasterCard International, increasingly compete for market share. With the economy beginning to recover, this negative trend will reverse, and revenue is expected to jump 4.9% in 2012.
During the five years to 2017, general economic improvements will drive industry growth. As unemployment falls and consumer confidence improves, demand for products and services will rise, increasing transaction volumes. Businesses are also projected to boost spending, as revenue improves and the economy stabilizes. Consequently, industry revenue is expected to steadily rise throughout the next five years. In addition to revenue growth, profit margins are set to improve, as operators benefit from consolidation and technological advancements that improve processing efficiencies.
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Establishments in this industry primarily engage in financial transaction processing, reserve and liquidity services, and check or other financial instrument clearinghouse services. The industry excludes electronic transactions associated with the US Federal Reserve (central bank).
IBISWorld industry Report Key Topics
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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