The Technology service providers in this industry are doing well – they ought to be doing well!

Payment volumes are growing, new technology trends like cloud and mobility are driving the changes, start up companies are giving a run to the incumbent players forcing them to change. All these have resulted in an opportunities for service providers to add value to the financial institutions such as banks, retailers and processors.

Fidelity National Information Service (FIS) and FiServ lead this segment in the  industry netting close to $2.5 billion each.  They provide the systems and infrastructure for the financial services to run the credit card, debit card, prepaid card services, Fraud management systems and the switches required for these companies to connect to the payment networks.  Other System Integration and outsourcing companies such as IBM, FICO, Tieto systems also provide services in this area.

While the usual credit card and debit card systems and the network infrastructure have provided the stable revenues, newer systems covering the EBPP (Electronic Bill Presentment and Payment), e-invoicing, Account to Account (A2A) transfer, Remote data capture, Person to person(P2P) transfer systems have been the engines of growth in the last few years.

The following diagram shows the growth of these companies over the last few years.. (Note that only payment-related revenues of these companies are considered for this report.)

Leading technology service providers in the industry

With the emergence of new players such as Google, Square, Paypal and ISIS , many of these companies have to change their strategy to remain relevant in the industry. There has been a string of acquisitions in this segment. Either niche service providers or startup companies are acquired by these larger players to arm themselves  with those capabilities.