Third-Party Processing: North American Market
Representing a $103 billion market in North America, third party processing and network services has benefited from the trend to outsourcing information systems and networking functions during the past decade.
Growing at an average annual rate (AAGR) of 9.5%, the total third party processing revenues is expected to approach $162,0 million in 2006.
The U.S. accounts for over 91% of this market with Canada accounting for the balance. It is a highly competitive market that is maturing.
STUDY GOALS AND OBJECTIVES
The goal of this report is to provide a detailed and comprehensive multi-client study of the North American market for third party data processing and potential opportunities in the future. The objectives include a thorough coverage of the underlying economic issues driving the third party processing , as well as assessments of new and potential products and services that third party processors are developing. Social, political, and regulatory issues are also covered. Another important objective is to provide realistic market data and forecasts for these third party processing services and their end-use markets as well as the potential impact of new trends in corporate computing. Special emphasis is placed on the role of corporate outsourcing.
This study provides the most complete accounting of ongoing third party processing developments in the U.S. and Canada currently available in a multi-client format. It provides the most thorough and up-to-date assessment that can be found anywhere on the subject. The study also provides extensive quantification of the many important facets of the market developments in the U.S. for third party processing. This, in turn, contributes to the determination of what kind of strategic response companies may adopt to compete in this dynamic market.
REASONS FOR DOING THE STUDY
The reason for doing this study is that with the increased emphasis by corporations and large organizations to return to core competencies, there has been a mounting push towards outsourcing a number of service and other non-core functions. Included are information services such as data processing. In addition, a number of information technologies continue to advance, allowing computing costs to come down. This is providing additional scale economies and the growth of third party processing service providers. In addition, the convergence of the Internet and various consumer and other electronic technologies in combination with a desire on the part of companies in a number of industries to forge new alliances and offer enhanced services has established a role for third party processors.
SCOPE AND FORMAT
The third party processing industry is not a precisely defined sector. Basically, the scope of the report is limited to those corporate, finance and banking, government, health care, and other process applications where a market for third party processing exists. The scope of the report includes credit card and other transaction processing, payroll and other human resource processing, medical claims and other insurance processing, data entry and data center management, data warehousing, other processing services in addition to gateway access, database access, and other network services. The report also looks at the role of electronic commerce (and payment) over the Internet.
The scope of this report is comprehensive, covering the present status of and future prospects for third party processing in the U.S. and Canada. It covers the many issues concerning the merits and future prospects of the third party processing , including corporate strategies, information technologies, and means for providing these highly advanced products and service offerings.
It also covers in detail the economic and technological issues that many regard as critical to the industry's current state of change. The report provides a review of the transaction processing and other third party processing industry and its structure, and the many companies involved in providing these computer services. The competitive position of the main players in the market and the strategic options they face are also discussed, as well as such competitive factors as marketing, distribution, and operations.
Throughout the text of the report, the terms "third party processing" and "computer outsourcing" are used interchangeably. Technically, the latter represents a more broad measure of information systems (IS) activities. The same holds true for the terms "third party processor" and "computer services" company.
The values presented in the forecast tables represent the value of the computer services or product used by the ultimate consumer, whether it is a corporation, bank, card association, government agency, or non-profit organization. As used in this report, the term revenue is equivalent to, and used inter-changeably with, the term purchases, demand and sales.
During the discussion of the individual market segments, the value of third party processing revenues is often related to indicators in the tables that are used for comparative purposes. They do not imply that the indicator used represents the sole market for these third party processing services or products. All growth rates mentioned in the tables and in the text are based on the average annual rate of growth from 2001 through the year 2006. The compounding method of calculating growth rates is used. Because current dollar measures are used, these growth rates thus reflect the growth in volume or real growth and the growth including the effects of price changes and changes in product/service mix.
Initially, a comprehensive and exhaustive search of the literature on third party processing was conducted. These secondary sources included brochures and other product literature, technical journals, technical books, marketing literature, other promotional literature, annual reports, security analyst reports, and other publications. In addition, there were formal and informal interviews with personnel in the third party processing and banking industries. Software suppliers, systems integrators, consulting companies, computer service bureaus, other information technology suppliers, technical experts, monetary authorities, government officials, and trade association officials were also interviewed, as well as the personnel of the third party processors themselves.
RELATED WORK BCC CREDENTIALS
Founded in 1971, Communications Co., Inc. (BCC) is known throughout the world for its technical-economic reports and services. The company has studied major market, economic, environmental, and technological developments that have characterized industry during the past two decades to produce reports, newsletters, and conferences. In the process, BCC has focused on advanced materials, high-technology systems and components, and novel processing methods since the development and marketing of these phenomena assert a profound influence on manufacturers and users on a worldwide scale.
BCC clients include almost every major corporation in the U.S., Canada, Western Europe, and Japan. Of related interest to the subject of third party processing are such BCC reports as: U.S. Payment and Bill Presentment Systems; Electronic Banking Systems: Present Status, Future Prospects; Smart Cards: New Directions; Electronic Cash; The Changing Retail Banking Structure; Point-of-Sales Retail Automation; Digital Imaging: Capture, Storage and Access; Internetworking; High Speed Networks: Technology and Trends; Mobile Wireless Data Communications; Future of Embedded Systems Technology; The Changing Domestic Telecommunications ; Online/Internet Industry Review; and Computer Software Markets, Development. The company has also conducted reports on a wide variety of other telecommunications, and electronics issues. Finally, BCC, Inc. also publishes the monthly newsletter Industry in Transition.