US and European processors jostle for pole position in Europe

The pace of evolution in Europe’s payment market is evident in all areas – including processors. Sweeping changes in consumer payment behaviour, merchant acceptance and democratisation of services have produced an environment very different to the one that existed a decade ago.

Just as payment methods have evolved into more form factors, payment processing requirements of merchants have ramped up to the point where even processors are struggling to meet demand.

Merchant processing needs were straightforward in the past. Up to around 2009, most retailers had separate payment processing contracts by channel, such as an acceptance contract for domestic cards, and one for internationally-branded cards.

In parallel, online payments for e-commerce purchases were a separate payments acceptance channel with different security and authentication solutions.

Today’s processing environment is characterised by the bundling of omnichannel and multi-payment processing contracts into a centralised service agreement. In addition, a wave of new market entrants has increased consumer appetite and willingness to try new emerging payment services, especially mobile payments and digital wallets.

PayPal had over 377 million active customer accounts globally in 2020, including 29 million merchant accounts (up 24% from 2019) and a record 15.4 billion transactions processed, for a total payment volume of $936 billion (up 31% from 2019).

Today’s retailers expect their payment service providers to accept any type of payment service and at any type of checkout, e.g. IBAN-based bank payments, advanced payment wallets, and prepaid products.

Multi-payment services acceptance is a prerequisite for merchant omnichannel strategies, which in turn is driving the consolidation of processing entities at a pan-European level, as US processors scramble to expand to meet market demand. We’ve already witnessed Fiserv acquiring First Data, Global Payments taking TSYS, and FIS acquiring Worldpay.

Pan-Nordic processor NETS had carved out its own expansion strategy, as detailed in the Yearbooks, including several of its own acquisitions of smaller domestic processing entities, especially in eastern Europe.

In 2020, Italy’s Nexi swooped on NETS for an all-share merger, creating a new European processing behemoth set to challenge US rivals for dominance in Europe’s fast-moving payment market.

The next 12 months will prove to be even more eventful as competition heats up, particularly in the quest to process the explosion of e-commerce transactions in the wake of the Covid-19 pandemic.

Digital & Card Payment Yearbooks

The Digital & Card Payment Yearbooks give a market leading and comprehensive, up-to-date picture of Digital and Card payment services including digital and card issuing, acquiring and processing business within 43 countries plus pan European and Eurasian overviews and more…

The reports are recognised through the payments industry as the most authoritative source for the Digital and Card payments business on the European and Eurasian payment markets.

The report comprises of 2 volumes – Volume 1 covers payments statistics of the 33 European countries and Volume 2 contains the Eurasian payments statistics on 10 countries. The European Payment Cards Yearbook 2020-21 and the Eurasian Payment Cards Yearbook 2020–21 are available to purchase as complete volumes or as individual country profiles.

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• Table of Contents highlighting key areas of research
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