TSG’s Directory of U.S. Merchant Acquirers, sponsored by Stax, is a report that includes key business statistics on more than 315 of the nation’s payment processing players that collectively process 90%+ of all card payment volume in the United States.
When looking at the data inside this report, a variety of merchant acquiring insights stand out:
- The top five players processed an estimated $6.5 trillion in card volume in 2022. All five players have a strong bank sales channel, as they are either bank-owned or have bank partners/clients from other areas of their business. Nearly 60% of volume represented in the directory is processed by these top five players, and nearly 90% of the volume represented in the directory is processed by the top twenty-five listed players.
- Looking at the top-ranked companies, JPMorgan Chase & Co. ranks first for estimated U.S. total processing volume at $2.15T, Fiserv ranks first for estimated U.S. total transactions at 48.5B, and Square ranks first for estimated U.S. total number of merchants at 3.2M.
- Stripe broke into the top 10 of processing volume for the first time in 2022. Stripe announced they expect to process over a trillion dollars in volume in 2023 globally.
- Adyen continued its strong pace of growth, increasing its dollar volume by over 50% in 2022. At Adyen’s current growth rate, they may break into the top 5 of merchant acquirers by U.S. processing volume in 2023.
- Only five of the players listed are estimated to serve more than one million merchants. Square is estimated to serve 500,000 more merchants than the player with the estimated next highest number of clients, albeit its merchant clients have a smaller than average size.
- Authorize.net (a Visa solution) is the payment gateway with the most partnerships among the acquirers listed, partnering with 42% of these players. This is an increase from 38% last year.
- Five of the top ten players listed grew their 2022 volume by more than the combined average volume growth of Visa, Mastercard, Discover, and American Express of 12.6%.
- 35% of the players listed sell Fiserv’s Clover point-of-sale products. This is down from 41% of providers that listed Clover as an available smart POS offering.
- 37% of the players have more than one sponsor bank relationship.
- California remained the most common headquarters state for the top 25 players and throughout the ~315 acquirers listed within the directory.
General Commentary: Merchant Acquiring Insights
2022 in many ways marked the first return to “normalcy” in acquiring industry trends since the onset of the COVID-19 pandemic. For as much as acquiring volume growth slowed in 2020, it rebounded just as furiously to make up for it in 2021 with anomalous growth often reaching in excess of 20% growth YoY for some acquirers. While having typically grown at an 8-year CAGR (compound annual growth rate) of ~9% since 2011, the combined U.S. total payment volume (TPV) of Visa, Mastercard, Discover, and American Express grew an average of 12.6% from 2021 to 2022 (compared to 23.5% from 2020 to 2021 and 3.2% from 2019 to 2020).
Several entities within the merchant acquiring and payment facilitator community outpaced the 12.6%, with notable examples of size being Adyen, Square, Stripe, Toast, and Shift4 all experiencing payment volume growth in excess of 20% in 2022.
While 2022 was mired in uncertainty with concern generated throughout the year towards inflation, current events, and supply chain difficulties, payment volume and retail sale growth did slow but was still positive YoY. Historically, eCommerce has been a primary driver of annual payment volume growth, but online retail growth has continued to slow since its initial record-breaking highs in 2020 due to the COVID-19 pandemic. While growing 42.8% YoY in 2020 compared to 2019, figures from the U.S. Department of Commerce indicate YoY eCommerce growth decreased in 2021 to 17.8%, and further slowed to 7.7% in 2022. While eCommerce growth has slowed from its initial explosion in 2020, eCommerce sales as a proportion of total retail sales has remained constant in 2020, 2021, and even 2022 at 14.6% of total retail sales (rounded).
This slowing of payment volume and retail sales growth has resulted in publicized layoffs at payments entities at the top of the ladder of the industry across both stalwarts and emerging tech players alike at companies such as Stripe, PayPal, Fiserv, and FIS that likely predicted that COVID-19 spending trends would continue to be exacerbated in subsequent years. Despite the concern and slowing of payment volume growth of these entities, these four examples alone are estimated to contribute to a third of all payment volume in the U.S. market.
The uncertainty that plagued 2022 remains at the beginning of 2023. As the concern towards the same contributing factors of 2022 (inflation, current events, supply chain slowdowns) remain present. Companies across the industry have begun to enter a stage where profitability is being prioritized in strategic decision making over growth generation.
Note: All entities acknowledged within this article and most represented within the referenced companion report are believed to own a portfolio of merchant accounts or hold a strategic interest in the management of their merchants’ internal payment processing functions, to the extent that they merit inclusion as a “merchant acquirer.” Ex. Square possesses multiple service provider registrations through Visa, including as a payment facilitator and as a registered ISO.