The factors impacting downstream demand are anticipated to continue improving over the five-year period.
New York, NY (PRWEB) January 24, 2014
The performance of the Foreign Currency Exchange Services industry was aided by the recovery of international trade and travel over the five years to 2014. Downstream corporate clients rely on industry operators for business-to-business payment services, while downstream individuals generally use credit and debit card processing services and currency exchange offerings. The anticipated 8.6% annualized increase in the total value of world trade and the 5.6% annualized increase in the number of inbound trips by non-US residents has boosted demand from these major markets from 2009 to 2014. Moreover, technological change, in the form of improved debit card offerings and mobile apps, have made industry services more convenient. As a result of these trends, Foreign Currency Exchange Services industry revenue is expected to increase from 2009 to 2014 at an annualized rate of 2.8% to $1.3 billion; this growth includes a 2.3% rise in revenue expected in 2014 alone.
According to IBISWorld Industry Analyst Stephen Hoopes, “The majority of industry operators is very small in size and handle a correspondingly small number of transactions.” According to the latest available data from KPMG, annual gross foreign currency exchange transactions exceed $500,000 for only 7.0% of industry operators. However, there are a few large players that operate in the industry, including Travelex, which has an estimated 240 stores and 460 ATMs in the United States. The location decisions of both large and small operators generally correlate with domestic population and travel trends. As such, California, New York and Florida account for large portions of industry establishments, given their substantial population figures and reputations as tourist destinations.
Over the five years to 2019, industry revenue is forecast to increase. The factors that impact downstream demand levels, including trade and travel, are anticipated to continue improving over the five-year period. “Yet, external competition from commercial banks that do not charge for traditional foreign exchange services will increasingly threaten margins for industry operators,” says Hoopes. Consequently, merger and acquisition activity is forecast to pick up over the five years to 2019, as smaller players combine in order to remain competitive. While not an acquisition, Apax Partners, the current owner of major player Travelex, is considering a sale or initial public offering for the industry operator, which is indicative of an industry-wide trend toward consolidation.
The Foreign Currency Exchange Services industry has a low level of concentration. While the majority of industry operators are small- to medium-sized firms, the largest firms in the industry have strong brand awareness.
For more information, visit IBISWorld’s Foreign Currency Exchange Services in the US industry report page.
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IBISWorld industry Report Key Topics
The Foreign Currency Exchange Services industry includes companies that offer foreign currency exchange services to consumers and businesses. Industry services include business-to-business payment services, credit and debit card processing services for foreign transactions and traditional currency exchange. Bank-holding companies that do not charge fees for foreign currency exchange services are not included in the industry, while industry-specific ATMs are not considered establishments.
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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