The North American Market for Third Party Payment, Payroll, and Healthcare Transaction Processing

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Published Jun 1, 2007 | 176 Pages | Pub ID: LA1362534

For your convenience, Packaged Facts has specially prepared a PowerPoint presentation of tables to accompany North American Market for Third Party Payment, Payroll, and Healthcare Transaction Processing . To facilitate further exploration, all slides include page references to the original report.
Now approaching $40 billion based on revenue gains consistently in the double digits, the North American market for third party processing is dominated by those companies that got in early and have maintained strong technology infrastructures. Technology in the form of computer power and memory—coupled with software that has allowed for scaling up and wide bandwidth networks—has allowed many of the long-term players to maintain control even as mergers and acquisitions continue to reshape the field, as seen in the April 2007 buyout of First Data by Kohlberg Kravis. Accordingly, the sheer size of top players—such as First Data Corp. in the payment segment, with $7.1 billion in 2006 revenues, and Automatic Data Processing in the payroll segment, at $8.9 billion—is a strong determining factor in how the market will shape up and continue to grow in the years ahead. At the same time, a number of upstarts have been able to gain a foothold—SurePayroll being a notable case in the payroll segment—by creating new applications that appeal to untapped market segments, in many cases homing in on small businesses and even specific consumer demographics.

Products Covered
This fully updated report critically and quantitatively assesses the market for data and payment-related transaction outsourcing. The North American Market for Third Party Payment, Payroll, and Healthcare Transaction Processing focuses particularly on data and transaction processing in three key segments—electronic payment processing, payroll processing, and healthcare transaction processing—with separate chapters tracing the services, market trends, consumer trends, and competitive strategies driving market growth and competition within each of these industry segments. It also addresses direct-to-consumer third party processing, particularly as it relates to the Internet, as well as the development and use of Internet processing applications. In addition, it identifies and assesses the key economic drivers and regulatory changes shaping each segment of the industry, as well as the trend whereby major competitors are adopting technologies and leveraging their massive infrastructures to expand beyond their traditional core businesses. Helping to illustrate these trends are competitive profiles of leading market participants including payment processor First Data Corp., payroll processor Automatic Data Processing, Inc. (ADP), and healthcare transaction processor Emdeon Corp.

Report Methodology
The information contained in The North American Market for Third Party Payment, Payroll, and Healthcare Transaction Processing obtained from both primary and secondary research, including informal consultation with industry participants and data-gathering from myriad business sources including trade publications and newsletters; articles in consumer business newspapers and magazines; government data; information from industry and non-governmental sources; annual reports, 10Ks, and other financial releases from public companies; and related financial reports by Packaged Facts.

How You Will Benefit from this Report
If your company is interested in joining the antioxidant bandwagon, you will find The North American Market for Third Party Payment, Payroll, and Healthcare Transaction Processing invaluable, as it provides a comprehensive package of information and insight about third party processing not offered in any other single source. Contributing to that understanding will be a complete analysis of data from published and trade sources, and an examination of the trends that are affecting this market’s three major segments.

This report will help:

  • Marketing Managers identify market opportunities and develop targeted promotion plans for electronic payment processing, payroll processing, and healthcare transaction processing.
  • Research and development professionals stay on top of competitor initiatives and explore demand for electronic payment processing, payroll processing, and healthcare transaction processing.
  • Advertising agencies to develop messages and images that promote electronic payment processing, payroll processing, and healthcare transaction processing.
  • Business development executives understand the dynamics of the third party processing market and identify possible partnerships.
  • Information and research center librarians provide market researchers, brand and product managers and other colleagues with the vital information they need to do their jobs more effectively.

Chapter 1: Executive Overview
  • Scope and Methodology
    • Market Definition
    • Report Methodology

  • The Overall Market
    • Payment TPP the Largest and Fastest Growth Segment
    • Figure 1-1: North American Market for Third Party Processing, 2002-2011 (in billions of dollars)
    • Figure 1-2: Share of North American Market for Third Party Processing: By Segment, 2002, 2006, 2011 (percent)
    • Established Giants Enjoy a Distinct Advantage
    • Looking Ahead

  • Payment Processing
    • The Basics of Payment Processing
    • Market Overview
    • Competitive Overview
    • Looking Ahead

  • Payroll Processing
    • The Basics of Payroll Processing
    • Market Overview
    • Competitive Overview
    • Looking Ahead

  • Healthcare Transaction Processing
    • The Basics of Healthcare Transaction Processing
    • Market Overview
    • Competitive Overview
    • Looking Ahead

Chapter 2: Payment Processing

  • Introduction
    • The Basics of Payment Processing
    • The Appeal of Non-Cash Transactions
    • Processing Card Transactions Is Primary Payment TPP Function
    • Numerous Options and Networks Comprise Payment TPP Universe
    • Debit Transaction Processing
    • Several Businesses Involved in Each Commercial Transaction
    • Following The Money: Process Flow in Card Transactions
    • Settlement Between Users and Issuers
    • Transaction Fees Are Revenue Core for Payment TPPs
    • Figure 2-1: North American Payment Third Party Processing Revenues, 2002-2011 (in billions of dollars)

  • Market Trends
    • Strong and Steady Growth for Payment TPP
    • Table 2-1: North American Market for Payment Third Party Processing, 2002-2006 (in billions of dollars)
    • Healthy Growth in Transaction Volume
    • Table 2-2: North American Payment Processing Transaction Volume, 2002-2006 (in billions of dollars)
    • Figure 2-2: Number of Payment Transactions, 2003, 2005, 2007
    • Debit Cards Are Biggest Driver of Business Growth
    • Shift Away from Credit Cards to Debit Cards
    • Debit Outpacing Credit Across the Board
    • Table 2-3: Consumer Reasons for Debit Card Use/Non-Use, 2006 (percent)
    • Debit Card Demographics: Youth Skew Implies At Least Some Uncertainty
    • Table 2-4: Demographic Characteristics of Users of Debit Cards (percent)
    • Gift Cards Are Fastest Growing Segment of Card Market
    • Online Banking: Analysis
    • Online Banking Now Used by More Than Half of Households
    • Figure 2-3: Growth of Online Banking: 1994-2006 (percent of U.S. households)
    • In-Person Banking Still Important to Consumers
    • Person-to-Person E-commerce: Analysis
    • PayPal Setting the Standard as Online TPP Prototype
    • Concerns About Economy Affect Consumer Spending Levels
    • Projected Market Growth
    • Table 2-5: Projected North American Payment Third Party Processing Revenues: 2006-2011 (in billions of dollars)

  • Competitive Overview
    • Competitive Landscape
    • Table 2-6: Leading Payment Third Party Processors
    • Future Growth of Payment TPPs Depends on Network Size

  • Competitor Profile: First Data Corp.
    • Still the Industry Leader Despite Major Revenue Loss
    • Table 2-7: First Data Corp. Financial Performance, 2004-2006 (in millions of U.S. dollars)
    • Too Many Acquisitions, Too Little Technology
    • A Return to Core TPP Businesses
    • First Data Gets Taken Over
    • Rebuilding and Restoring Customer Trust

  • Competitor Profile: Fiserv, Inc.
    • The Largest Nonbank Check Processor
    • Table 2-8: Fiserv, Inc. Financial Performance, 2004-2006 (in millions of U.S. dollars)
    • Four Primary Business Areas
    • Unique Product Offerings
    • Acquisition and Cross-Pollination Infuse Growth Strategy

  • Competitor Profile: Alliance Data Systems (ADS)
    • Successful Branding Programs in the U.S. and Canada
    • Table 2-9: Alliance Data Systems Financial Performance, 2004-2006 (in millions of U.S. dollars)
    • Canada’s Pre-eminent Loyalty Program
    • Faster Transactions and Data Capture at the Pump
    • New Clients and Strong Programs Point Towards Double-Digit Growth

  • Competitor Briefs
    • Fidelity National Information Services, Inc.
    • Table 2-10: Fidelity National Information Services, Inc. Financial Performance, 2004-2006 (in millions of U.S. dollars)
    • Total System Services, Inc.
    • Table 2-11: Total System Services, Inc. Financial Performance, 2004-2006 (in millions of U.S. dollars)
    • Metavante Corporation
    • Global Payments, Inc.
    • Table 2-12: Global Payments, Inc. Financial Performance, 2004-2006 (in millions of U.S. dollars)
    • EFD (eFunds Corporation)
    • Table 2-13: EFD (eFunds Corporation) Financial Performance, 2004-2006 (in millions of U.S. dollars)

  • Marketing and Service Trends
    • Market Directed by Consumer Preferences
    • Consumers Eliminate Paper, Increase Security with Debit Cards
    • Table 2-14: Transactions Handled by Major Networks, 2006 (percent)
    • New Entrants into Debit Card Market
    • Need for Real-Time Processing Favors TPPs
    • Prepaid Gift Cards a High-Interest Area
    • Segment Growth Expected to Be Very Strong
    • Converting Coins to Cards
    • Hidden Card Fees Draw Government Scrutiny
    • The Future of Check 21

  • Looking Ahead
    • Industry Shifts Affect Competitive Outlook
    • Businesses Must Still Rely on Infrastructure
    • Consumers Will Gravitate Towards Faster, Easier-To-Use Payments
    • Contactless Payments Speed Up Transactions
    • Table 2-15: Number of Oil Cards in Use: 2004 vs. 2005
    • The Role of American Express, Visa, and MasterCard
    • The EMV Alternative
    • The EMV/Contactless Hybrid as an Industry Compromise
    • The Wal-Mart Effect
    • More Payments Via Mobile Phone in the Future
    • Obopay Takes PayPal Model Mobile
    • Millions of Mobile Phones = Millions of Transactions
    • North America Playing Catch-Up
    • Declining Usage of Coins

Chapter 3: Payroll Processing

  • Introduction
    • The Basics of Payroll Processing
    • Core Payroll TPP Services
    • The Rationale for Payroll Outsourcing
    • Effective Payroll Outsourcing
    • Drawbacks to Payroll Outsourcing
    • Figure 3-1: North American Market for Payroll Third Party Processing, 2002-2011 (in billions of dollars)

  • Market Trends
    • Steady Growth for Payroll TPP
    • Table 3-1: North American Market for Payroll Third Party Processing, 2002-2006 (in billions of dollars)
    • Online Players Expand Market by Targeting Smaller Firms
    • Potential Client Base Over 5 Million Strong
    • Table 3-2: Number of Firms, Establishments, Employees, and Annual Payroll of U.S. Employer Firms, 2004
    • Market Penetration Still Less Than 50% of Potential Market
    • Table 3-3: How Businesses Process Stages of Payroll (percent)
    • Figure 3-2: Payroll Processing By Practice (percent)
    • Positive Employment Trends
    • Table 3-4: Estimates of Total Nonfarm Private Employment, March 2006-March 2007
    • ADP National Employment Report Also Paints Positive Picture
    • Growth Expected to Come from New Clients
    • Small Business Health Another Key Barometer
    • Growth of Payroll TPP Organizations
    • Projected Market Growth
    • Table 3-5: Projected North American Payroll Third Party Processing Revenues, 2006-2011 (in billions of dollars)

  • Competitive Overview
    • Census Definition of “Payroll Services” Not All-Inclusive
    • More Than 4,000 Payroll Establishments of Varying Size
    • Employment Size in Payroll TPPs
    • Table 3-6: Payroll Services Enterprises: By Employment Size, 2004 (number)
    • The Market Leaders
    • Table 3-7: Leading Payroll Third Party Processors, 2007 (in millions of dollars)
    • Other TPPs in the Payroll Space
    • The Role of Business Process Outsourcers (BPOs) and Human Resources Outsourcers (HROs)
    • The Role of Application Service Outsourcers (ASOs)
    • The Rise of Professional Employer Organizations (PEOs)

  • Competitor Profile: Automatic Data Processing, Inc. (ADP)
    • The World’s Largest Payroll/Tax Filing Processor
    • Table 3-8: ADP Financial Performance, 2004-2006 (in millions of U.S. dollars)
    • Renewed Focus on Payroll
    • Expansion and Divestiture
    • Revised Revenue Perspective
    • Adjacent Markets and New Business

  • Competitor Profile: Paychex
    • Building a Big Business on Small Business
    • Table 3-9: Paychex Financial Performance, 2004-2006 (in millions of U.S. dollars)
    • Payroll Is Key to Paychex’s Success
    • Opportunities Beyond Payroll
    • Internal and Organic Growth Define Paychex

  • Competitor Profile: Ceridian
    • Payroll Is Just the Beginning
    • Table 3-10: Ceridian Financial Performance, 2004-2006 (in millions of U.S. dollars)
    • Two Business Units: HRS and Comdata
    • Ceridian Eyes Convergence of Payroll and Payment
    • Moving Past Payroll?

  • Marketing and Service Trends
    • Scope of Payroll Processing Expanding
    • Online Growth
    • SurePayroll Exclusively Online-Based
    • Ultimate Software and UltiPro
    • “Branded Payroll” Appeals to Accountants
    • Accountants as TPPs
    • CompuPay Hones in on CPAs
    • Interest in Payroll Cards
    • Fee Variations
    • Growth Areas
    • An Attractive Climate for PEOs

  • Looking Ahead
    • Deploying Technology and Allocating Resources
    • Big Opportunities in Small Business
    • Branding Options at the Small Business Level
    • More Companies Vying for Business
    • Table 3-11: Projected Number of U.S. Companies Providing Payroll Processing Services: 2002-2010
    • The Effect of Foreign Outsourcing
    • Evolving Payroll Methods

Chapter 4: Healthcare Transaction Processing

  • Introduction
    • The Basics of Healthcare Transaction Processing
    • Core Healthcare Transaction TPP Services
    • The Health Insurance Portability and Accountability Act
    • Figure 4-1: North American Market for Healthcare Transaction Third Party Processing, 2002-2011 (in billions of dollars)

  • Market Trends
    • Healthcare Transaction TPP Still an Emerging Market
    • Table 4-1: North American Market for Healthcare Transaction Third Party Processing, 2002-2006 (in billions of dollars)
    • Increasing Costs a Major Concern in Healthcare Business
    • Healthcare Payers Turn to TPPs for Cost Efficiencies
    • Electronic Processing of Clinical Transactions in Early Stage
    • Increased Use of Information Technology for Clinical Purposes
    • Reimbursement Cycle Increasingly Automated
    • Projected Market Growth
    • Table 4-2: Projected Healthcare Transaction Third Party Processing Revenues, 2006-2011 (in billions of dollars)

  • Competitive Overview
    • Market Involves Numerous Participants
    • TPP Turmoil Mirrors Overall State of Healthcare Business
    • Third Party Administrators (TPAs) Manage Healthcare Programs TPAs Offer Extended TPP Services

    Competitor Profile: Emdeon Corp.
    • Constant Reinvention Is Industry Leader’s Strategy
    • Table 4-3: Emdeon Corp. Financial Performance, 2004-2006 (in millions of U.S. dollars)
    • Business Services Are Primary TPP Engine
    • Change in Business Focus Results in TPP Spin Off
    • Strengthening the Core Brand
    • TPP Focus Will Be on the New Company

  • Competitor Profile: Per-Se Technologies, Inc.
    • Transaction Leader Offers Business Services to the Healthcare Industry
    • Table 4-4: Per-Se Technologies, Inc. Financial Performance, 2003-2005 (in millions of U.S. dollars)
    • Per-Se Targets Three Business Segments
    • Physicians
    • Pharmacies
    • Hospitals
    • Continued Growth Through New Clients and Products

  • Competitor Profile: MedAvant/ProxyMed, Inc.
    • Networking Is MedAvant’s Core Business
    • Table 4-5: MedAvant/ProxyMed, Inc. Financial Performance, 2004-2006 (in millions of U.S. dollars)
    • Standardizing on a Single Product Platform
    • Aggressive Expansion via Acquisitions
    • Acquisitions at the Expense of Revenue Growth?

  • Marketing and Service Trends
    • Expanding Existing Networks
    • Shifting to Electronics Fund Transfer
    • Closing the Transaction Loop Will Help Lower Costs
    • Debit Cards for Account-Based Health Plans
    • Consumer-Driven Healthcare, Debit Use May Spur More TPP
    • Cards Provide Benefits to the Industry
    • Cards Provide Convenience for Patients and Providers
    • Industry Must Comply with New HIPAA Regulations
    • Privacy and Security Compliance
    • Transaction and Code Sets Compliance
    • HIPAA Update and Implementation Challenges
    • Additional Regulation of Transaction Services

  • Looking Ahead
    • Cost Concerns Will Drive Further Consolidation
    • Healthcare Costs Expected to Rise Substantially
    • Table 4-6: Healthcare Spending by U.S. Consumers and Businesses, 2003-2016
    • Greater Consumer Involvement in Own Healthcare Necessitates More Flexible TPP
    • A Whole New Universe of Transactions
    • Figure 4-2: Number of Healthcare Transactions in the U.S., 2003-2016 (in millions)
    • A Converging TPP Marketplace
    • Competitive Aspect of Proprietary Systems Slows Adoption of Standardized Electronic Health Records
    • Finalized Medicare Standards Set for 2008

Appendix: Addresses of Selected Marketers

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