The Nilson Report

Issue 1171 | Mar 2020


Companies featured in this issue include:

Top Acquirers in the U.S.

Investments & Acquisitions—February 2020

U.S. Acquirer Totals 2019—Purchase Volume/Transactions

Merchant Acquirers in the U.S. 2019—Ranked by Visa/Mastercard Volume

U.S. Card Not Present (CNP) Acquiring 2019

Merchant Acquirers in the U.S. 2019 Ranked by Visa/Mastercard Volume

The table on pages 10 and 11 presents the 65 largest merchant acquirers in the U.S. ranked by Visa and Mastercard purchase volume handled in 2019. The five largest are shown here.

1. Chase Merchant Services, New York
$1,147.67 billion purchase volume, +10.1%
2. Bank of America Merchant Services, Georgia
$719.93 billion purchase volume, +5.2%
3. FIS (includes Worldpay), Florida
$707.84 billion purchase volume, +4.9%
4. Wells Fargo Merchant Services, California
$513.26 billion purchase volume, +21.9%
5. Global Payments (includes Tsys), Georgia
$507.39 billion purchase volume, +7.4%

Full access to the Merchant Acquirers 2019 Ranked by Visa and Mastercard Purchase Volume results in the United States is available when you subscribe to The Nilson Report. 



Afterpay Installment Loans

Five years ago, Afterpay launched its installment loan program for merchants in Australia, a country in which credit card penetration was high, including revolving credit usage as high as anywhere in the world. The company correctly determined that consumers wanted to extend payments for select purchases that would not be tied to a revolving line of credit. And that market dynamic continued to be true when the company expanded to New Zealand, the U.K., and the U.S. It will be in Canada before year-end.

Today, 85% of Afterpay’s 7.3 million active customers bill their installment loans to Visa or Mastercard debit cards. The other 15% are billed to Visa or Mastercard credit cards. In Australia and the United States, the average transaction is valued at $150. That amount is spread out over four payments. After the initial charge, the remaining three are billed automatically to card accounts every 14 days. Consumers do not pay any fees if payments are made on time. Merchants receive the full value of the purchase upfront, minus the fee to Afterpay. Settlement is made through an automated clearing house the day after the initial sale. 

Afterpay earns 85% of its revenues from fees paid by the 43,000 merchants who offer the company’s installment loans at checkout. The other 15% comes from those consumers who don’t pay on time. When consumers are first offered the installment payment option, they are typically limited to $500. After demonstrating good payback behavior, they can access up to $2,000. Every purchase is evaluated and approved by the Afterpay credit risk engine.

Afterpay assumes all credit risks. It finances installment loans from more than $1.00 billion in debt facilities it maintains with National Australia Bank, Citi, Goldman Sachs, and Bank of New Zealand.

When quickly meeting merchant demand for its service proved to be an obstacle to rapid growth, Afterpay decided to connect to online sellers through the Visa and Mastercard networks. In the U.S. (Visa) and Australia (Mastercard), Afterpay has started to issue virtual cards to handle settlement with its merchants. It also sees using virtual Visa and Mastercard cards as a way to expand its acceptance network to larger merchants. Consumers are not aware their payments have been turned into virtual card transactions.

Afterpay has formed a partnership with processor Marqeta to facilitate virtual card payments to merchants in the U.S., where nearly half of its active consumer base resides and the company is linked to 7,400 merchants. 

In Australia, Afterpay offers merchants installment payments as an option for their in-store sales. U.S. merchants will be able to do the same this year.

Kareem Al-Bassam is Chief Payments Officer at Afterpay in Sydney, Australia,,

© Copyright 2020 The Nilson Report

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