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Stability at the top company in 2007, the debt rose from $2.5 billion to $22.5
billion, more than twice the company's annual revenue. I
The list of top ten processors hasn't changed much in am not making this up. Annual profit fell from $1.5 billion
the last few years. Data I have from mid- 2010 shows the to a negative $500 million.
following:
Last year, First Data had to renegotiate some of its debt
1. First Data Corp. (acquired Sept. 2007 by Kohlberg, out to 2017. First Data lost $3.8 billion in 2008, lost $1.1
Kravis, and Roberts & Co. and taken private) billion in 2009, and lost $1 billion in 2010. For the first nine
2. Bank of America Corp. (alliance with First Data months of 2013, the consolidated net loss was $746 million.
started in 2009; BofA owns 46.5 percent) I will refrain from commenting on these figures, because
3. Vantiv (spun off from FifthThird Bank in 2009) they speak for themselves.
4. Chase Paymentech
5. Heartland Payment Systems Inc. Of course, you might argue that this is benign, because
6. WorldPay First Data is subsidizing merchants and ISOs via these
7. Elavon Inc. massive losses, but I am not so sure that is a viable long-
8. Global Payments Inc. term strategy. In fact, as a car collector, this reminds me
9. Wells Fargo & Co. (alliance with First Data renewed of the notorious Cerberus Capital Management's 2007
Dec. 2008; the bank owns 60 percent of Wells Fargo acquisition of DaimlerChrysler AG, which ended badly for
Merchant Services) the boy wonders at Cerberus.
10. First National Merchant Solutions
Options for smaller players
Preliminary data collected by The Green Sheet indicates the
following companies were the top 10 acquirers in 2013: Now let's circle back to the wine business. It seems that the
top 10 big wineries control about 20 percent of the land,
1. First Data (includes Alliance Partners BofA, Wells and there are 1,500 healthy small growers. I wouldn't call
Fargo & Co., Citigroup Inc., PNC Financial Services that a concentration. There is still healthy competition, and
Group Inc. and others) it is an incestuous industry, with people moving around
2. Chase Paymentech all the time. Knowledge and information is being shared,
3. Vantiv to a large degree through the University of California at
4. Elavon Davis. The acid test is, would you and could you start a
5. Global Payments small winery today? The answer is yes.
6. Heartland
7. TSYS (acquired FNMS in 2011) But on the payments side, could you start a new network,
8. WorldPay processor or even large ISO today from scratch? I can't
9. TransFirst imagine that many people would agree this is possible.
10. iPayment This is good news for the existing players, but not so good
news for the traditional small ISO, the reason that The
The top 10 processors in the world handle fully half of global Green Sheet was started in the first place.
transaction volume. Of course you would expect money
center banks like Wells Fargo and Bank of America (who This doesn't, however, mean the demise of smaller players.
would have guessed that North Carolina would become If you aren't working with a top 10 payment company,
a global money center?) would be on this list because think about how to add value to your merchants to make
they have a lot of business-loan clients. It isn't legal for a you an integral part of their businesses, not a commodity.
bank lender to "tie" the loan to other contingencies, such Fortunately, the many new ideas and innovative products
as moving all their depository and investment business to coming out now make this a realistic option.
the lender, but it does happen. In my years of banking, I
have seen it happen many times.
First Data's reach Brandes Elitch, Director of Partner Acquisition for CrossCheck Inc., has
been a cash management practitioner for several Fortune 500 com-
When the First Data, BofA alliance was formed, BofA was panies, sold cash management services for major banks and served
able to bring 240,000 merchants to the books, and First as a consultant to bankcard acquirers. A Certified Cash Manager
Data brought 140,000. This is critical mass. I imagine the and Accredited ACH Professional, Brandes has a Master's in Business
same is true for the Wells Fargo alliance, too. Estimates I Administration from New York University and a Juris Doctor from Santa
have seen indicate First Data processes fully 40 percent of Clara University. He can be reached at brandese@cross-check.com.
all transactions. Now, that is a concentration.
But what does it really mean to have a concentration in
the card processing business? To answer this, you have to
look at First Data in more detail. After KKR bought the
33
Stability at the top company in 2007, the debt rose from $2.5 billion to $22.5
billion, more than twice the company's annual revenue. I
The list of top ten processors hasn't changed much in am not making this up. Annual profit fell from $1.5 billion
the last few years. Data I have from mid- 2010 shows the to a negative $500 million.
following:
Last year, First Data had to renegotiate some of its debt
1. First Data Corp. (acquired Sept. 2007 by Kohlberg, out to 2017. First Data lost $3.8 billion in 2008, lost $1.1
Kravis, and Roberts & Co. and taken private) billion in 2009, and lost $1 billion in 2010. For the first nine
2. Bank of America Corp. (alliance with First Data months of 2013, the consolidated net loss was $746 million.
started in 2009; BofA owns 46.5 percent) I will refrain from commenting on these figures, because
3. Vantiv (spun off from FifthThird Bank in 2009) they speak for themselves.
4. Chase Paymentech
5. Heartland Payment Systems Inc. Of course, you might argue that this is benign, because
6. WorldPay First Data is subsidizing merchants and ISOs via these
7. Elavon Inc. massive losses, but I am not so sure that is a viable long-
8. Global Payments Inc. term strategy. In fact, as a car collector, this reminds me
9. Wells Fargo & Co. (alliance with First Data renewed of the notorious Cerberus Capital Management's 2007
Dec. 2008; the bank owns 60 percent of Wells Fargo acquisition of DaimlerChrysler AG, which ended badly for
Merchant Services) the boy wonders at Cerberus.
10. First National Merchant Solutions
Options for smaller players
Preliminary data collected by The Green Sheet indicates the
following companies were the top 10 acquirers in 2013: Now let's circle back to the wine business. It seems that the
top 10 big wineries control about 20 percent of the land,
1. First Data (includes Alliance Partners BofA, Wells and there are 1,500 healthy small growers. I wouldn't call
Fargo & Co., Citigroup Inc., PNC Financial Services that a concentration. There is still healthy competition, and
Group Inc. and others) it is an incestuous industry, with people moving around
2. Chase Paymentech all the time. Knowledge and information is being shared,
3. Vantiv to a large degree through the University of California at
4. Elavon Davis. The acid test is, would you and could you start a
5. Global Payments small winery today? The answer is yes.
6. Heartland
7. TSYS (acquired FNMS in 2011) But on the payments side, could you start a new network,
8. WorldPay processor or even large ISO today from scratch? I can't
9. TransFirst imagine that many people would agree this is possible.
10. iPayment This is good news for the existing players, but not so good
news for the traditional small ISO, the reason that The
The top 10 processors in the world handle fully half of global Green Sheet was started in the first place.
transaction volume. Of course you would expect money
center banks like Wells Fargo and Bank of America (who This doesn't, however, mean the demise of smaller players.
would have guessed that North Carolina would become If you aren't working with a top 10 payment company,
a global money center?) would be on this list because think about how to add value to your merchants to make
they have a lot of business-loan clients. It isn't legal for a you an integral part of their businesses, not a commodity.
bank lender to "tie" the loan to other contingencies, such Fortunately, the many new ideas and innovative products
as moving all their depository and investment business to coming out now make this a realistic option.
the lender, but it does happen. In my years of banking, I
have seen it happen many times.
First Data's reach Brandes Elitch, Director of Partner Acquisition for CrossCheck Inc., has
been a cash management practitioner for several Fortune 500 com-
When the First Data, BofA alliance was formed, BofA was panies, sold cash management services for major banks and served
able to bring 240,000 merchants to the books, and First as a consultant to bankcard acquirers. A Certified Cash Manager
Data brought 140,000. This is critical mass. I imagine the and Accredited ACH Professional, Brandes has a Master's in Business
same is true for the Wells Fargo alliance, too. Estimates I Administration from New York University and a Juris Doctor from Santa
have seen indicate First Data processes fully 40 percent of Clara University. He can be reached at brandese@cross-check.com.
all transactions. Now, that is a concentration.
But what does it really mean to have a concentration in
the card processing business? To answer this, you have to
look at First Data in more detail. After KKR bought the
33
