The industry's high profit margins will expand, propelled by rapid revenue growth
Los Angeles, CA (PRWEB) July 19, 2012
The Online Payment Processing Software Developers industry has experienced rapid growth over the past five years, with revenue expanding an average of 20.6% annually in the five years to 2012. This strong growth has been driven primarily by the shift of demand from traditional brick-and-mortar stores to online retail outlets. Demand for online payment processing services is directly tied to the usage of online retail and auction sites. As a result, demand for industry services has increased dramatically. In 2012, the recovering economy will boost revenue growth even further. According to IBISWorld industry analyst Dale Schmidt, growing per capita disposable income will induce consumers to spend more online, helping industry revenue grow 28.0% in 2012 to reach $11.8 billion. The rapid revenue growth has led to high profit margins for the industry's major players (estimated at 19.9% for 2012) and a large number of entrants into the industry. In the five years to 2012, the number of firms in the industry has grown an average of 16.2% annually, and is expected to grow at an average of 14.9% annually over the next five years. Some acquisition activity has taken place, such as eBay's acquisition of the mobile payment platform developer Zong. Acquisition activity will increase slightly in the next five years, but the flood of industry entrants will overwhelm this effect.
Over the next five years, mobile payment processing systems are expected to become a prominent part of the industry. These systems will allow small businesses and merchants to receive payments via their mobile phones. The new technology has already gained a foothold in some industries, particularly taxi companies, but will become more widespread over the next five years as developers improve the interface and consumers and merchants grow comfortable with the new technology. Over the long term, the industry will look to develop a payment as a platform model. A PaaP system would create an all-encompassing layer to connect disparate methods of payment. These two new product types will encourage continued rapid revenue growth, with the industry expected to grow over the five years to 2017.
The Online Payment Processing Software Developers industry exhibits a low level of concentration, with the largest industry player accounting for about 24.2% of industry revenue in 2012. The industry is highly fragmented, with a majority of payment platform developers operating in specific verticals. For example, some banks have implemented their own payment platforms for their customers to use and certain payment processing software only targets businesses of a certain size. “Additionally, the industry's low level of concentration is indicative of a relatively new industry; as the industry experienced rapid growth in the early part of the past decade, many new firms entered the industry to try to capitalize on this growth,” says Schmidt. However, to date, very few firms have succeeded in capturing significant market share. Those who have succeeded have typically leveraged their other services to their advantage (e.g. eBay) or acquired several other payment processing platforms (e.g. Visa). As firms consolidate to grow their economies of scale and add innovative services to their portfolio, market share concentration is expected to increase. For more information, visit IBISWorld’s Online Payment Processing Software Developers in the US industry report page.
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IBISWorld industry Report Key Topics
This industry comprises establishments primarily engaged in providing online payments processing software. Online payments processing software enables merchants to authorize, settle and manage credit card and electronic check transactions via Web sites.
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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