The same research attributes this considerable growth to the shift of demand from traditional brick-and-mortar stores to online retail outlets in the US. The survey points out that demand for online payment processing services is directly connected to the usage of online retail and auction sites. As a result, demand for industry services has increased considerably and is predicted to continue to grow.
According to the survey, growing per capita disposable income is expected to induce US consumers to spend more online, helping industry revenue grow an estimated 28 percent in 2012 to reach USD 11.8 billion. The rapid revenue growth has led to high profit margins for major industry players (estimated at 19.9 percent for 2012) and a number of entrants into the industry.
The report points out that in the five years to 2012, the number of US companies in the online payment processing software developers industry has grown an average of 16.2 percent annually, and is expected to grow at an average of 14.9 percent on an annual basis over the coming five years.
The study also found that over the next five years, mobile payment processing systems that allow small businesses and merchants to receive payments via their mobile phones are expected to become a prominent part of the US industry. The new technology has already gained a foothold in some industries, particularly taxi companies, but is expected to become more widespread over the next five years as developers improve the interface and consumers and merchants grow comfortable with the new technology.
According to the research, the US online payment processing software developers industry exhibits a low level of concentration, with the largest industry player accounting for around 24.2 percent of industry revenue in 2012. The US industry was found to be 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.
However, the research found that to date, few companies have succeeded in capturing a significant market share. Those who have succeeded have typically leveraged their other services to their advantage (such as eBay) or acquired other payment processing platforms (such as Visa).
The research was carried out by independent provider of industry and market research IBISWorld.
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