Description
While “mom and pops” may seem insignificant compared to mega-retailers, their combined sales account for roughly half of all retail spending. Moreover, these businesses (there are roughly 25 million of them in the U.S.) generate an oversized share of the retail and service industry’s new ideas and a major portion of innovation and growth.
Merchant payment services
In the U.S., small business acquiring has long been the profitable anchor in the industry, generating roughly two-thirds of industry revenues on one-fifth of the volume (Exhibit 1). Small business is a dynamic segment, increasingly competitive, and a must-win for any player in merchant acquiring.
Several trends are reshaping small business acquiring. In the post-crisis recovery, small business sales volumes have been sluggish. As larger firms grow their volumes, the mix for many acquirers will shift to lower-margin segments and impact overall revenues. As small business recovers, however, this should provide a boost for acquirers. At the same time, pricing pressure in this segment is higher than ever. New entrants have promoted set pricing and stripped out fees, establishing new reference points for many small businesses. The competition for this segment, therefore, will be rigorous.
