In the US, we have Cybersource (Visa) as the leader of the payment gateways followed by Paypal in terms of the Total Payment Volume (TPV) handled. Amazon Payments is a distant third. Google Checkout, I guess, is negligible as Google doesn’t bother to mention this in their annual report.
Couple of disclaimers before I put up the graph:
a. The TPV of Cybersource and Paypal represent their total payments volume worldwide. As a rough estimate, you can consider that about 50% of that value to come from the US and the other 50% from the rest of the world in 2011.
b. I have guesstimated the TPV of Cybersource for 2010 and 2011. Visa stopped releasing the Cybersource TPV after the acquisition, but they still give out the number of billable transactions that flows through Cybersource.
c. Amazon doesn’t release the TPV. I have just considered the North American GMV excluding other revenues.
Total Payment Volume (TPV) of leading payment gateways in the US (in billions of US$)
Analyses:
1. Cybersource and Paypal processed almost similar volumes in 2006. Cybersource’s Authorize.net acquisition and Visa’s haven has made it skyrocket!!
2. The black dashed line represents the total eCommerce sales in the US. I have included that just to give a sense of how these payment gateways are growing worldwide.
3. Google Checkout was launched at the same time as Amazon checkout in 2006. Of course, Amazon had its own payments to process and that is what is making it a player, albeit small, in the payment gateway business. Google sank a lot of money into its Checkout program in 2006 and 2007, but never made out to be a significant player. Unless Google or Amazon makes “a splash” with a new model, new payment instrument, they cannot come up and join the leaders. I will give my thoughts on how Amazon/Google can break the small ripples and make a huge splash in the next few days.
For now, this gateway business has become a commodity business. High volume, operational efficiency and effective fraud management are the key to success.