Financial Transaction Processing

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 3,500 financial transaction processing companies provide payment processing, reserve and liquidity, and check or other financial instrument clearinghouse services. As intermediaries between buyers and sellers, clearinghouses validate, settle, and finalize financial transactions. Payment service providers (PSP) act as middlemen between banks, merchants, and card networks and aggregate credit card and other forms of electronic payment processing for tens of thousands of small to medium-sized businesses. Peer-to-peer (P2P) payment systems, which include money transfer applications, allow users to send money directly to another user through a linked bank account.

Extensive Regulation and Oversight

Because financial transaction processing deals directly with money and private accounts, the industry is subject to extensive regulation and oversight by government and other organizations.

Industry Concentration and Competition

The payment processing industry is highly competitive and dominated by large companies.

Industry size & Structure
Industry Forecast
Financial Transaction Processing Industry Growth
Source: Vertical IQ and Inforum

Recent Developments

May 19, 2024 - Weak Sales Growth Expected
  • Financial transaction processing industry sales are forecast to grow at a 1.66% compounded annual rate from 2024 to 2028, slower than the growth of the overall economy. Financial transaction processing industry employment increased slightly during the first quarter of 2024 while average wages for nonsupervisory employees increased moderately, according to the US Bureau of Labor Statistics.
  • Visa and Mastercard have agreed to cut and temporarily cap credit card processing fees as a part of a settlement of a legal dispute with merchants. Merchants have long accused Visa and Mastercard of charging inflated swipe fees, or interchange fees, when shoppers use credit or debit cards and of barring them through “anti-steering” rules from directing customers toward cheaper means of payment, according to Reuters news service. Swipe fees typically average about 1.5% to 3.5% per transaction, according to The settlement is still subject to court approval, and any changes would not go into effect until late 2024 or 2025, according to a statement from Mastercard.
  • More banks will have to sign on to instant payment services like The Clearing House’s RTP Network and the Federal Reserve’s FedNow Service to enable faster payments, and services must be interoperable to accelerate growth of instant payment systems, according to Cory Barnes, senior product manager at payment technology platform provider Form3. Payments initiated on one system today must travel and settle within that system. A payment or remittance can’t travel from a bank on one system and land with a bank on another system. Barnes likened the situation to the mobile phone landscape a few decades ago, where Verizon subscribers could not call someone on the AT&T network. That changed over time, Barnes says, and we’re headed to the same flexibility with instant payments. Increased participation and interoperable systems will in turn will spur a “network effect” and growth in the number of endpoints. “The expectation with instant payments is that they are frictionless,” Barnes said. “It’s all about the end user.”
  • Almost 500 institutions have joined the Federal Reserve’s FedNow Service since it was launched in July 2023, according to Federal Reserve officials. The FedNow Service is an instant payments infrastructure that allows participating banks and credit unions to send and receive transactions within seconds on behalf of their customers — 24 hours a day, seven days a week. Some financial transaction processing companies may be negatively impacted if use of the FedNow Service shows strong growth. Many of the current FedNow participants are regional and community institutions, whereas many bigger banks, including online banks, haven’t signed on yet. Notable large participants include Chase, Wells Fargo, and U.S. Bank.
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