Credits cards are still the driving force of the payment world as it is the most common method of making purchases in-store. Many businesses are looking for the best way to process credit card payments, with the help of websites like https://merchantalternatives.com/merchant-services/merchant-accounts/credit-card-processing-small-business/ listing the best merchant accounts. The volume of credit card payments has recently surpassed $3 trillion annually and is only continuing to increase. 
A Brief Introduction of the Credit Card Processing Industry
There are two types of credit card processors:
1. Front-End Processors
The process ensures that the cardholder’s account has enough funds in the account to carry out the transaction. It then routes transactions from merchants to the cardholder’s account for access.
credit card processing
2. Back-End Processors
It accepts payment from front-end processors and transfers it to the merchant’s issuing account
Although there are multiple credit card processing companies, here are a few of the larger acquirers that stand out.
Adyen
It is a leading credit card processing company, offering a full-stack gateway to eCommerce businesses. The company deals with risk management, payment gateways, and front-end credit card processing services.
Fiserv
Fiserv offers its full-stack payment gateways that comply with the payment methods of more than 100 different countries. In 2019, the company bought First Data to secure its data transference processes. The combined synergies may generate $500 million in revenue in five years.
Total System Services (TSYS)
It is the third-largest payment processor in the US, serving more than 3.5 million small and medium merchants. The company works with 1,300 different financial institutions in 100 countries. In 2019, it acquired Global Payments. Together, they aim to generate $300 million in revenue.
Elavon
The company is the fourth largest acquirer in Europe and seventh in the US. It is the subsidiary of US Bancorp, designed to provide online transactions and in-store payments. The company partnered with Sage Pay to increase its payment gateway market share in the UK and Ireland.
Latest Trends in Credit Card Processing
The future of credit card processing will be subject to game-changing trends that continue to evolve over time. Read ahead as we discuss these two trends in detail:
Rewards
A recent study shows that around 75% of the consumers have various reward systems attached to their favorite cards. The survey also highlights that the quality of the rewards program is the number one factor considered when consumers choose which credit card to sign up for. This held true across age groups as millennials and Gen-Z showed the same preference. 
The three prevailing reward trends in 2020 are:
  • Flexible Incentives—the ability to select benefits based on personal choices
  • Bonus points for an eCommerce shopping
  • Bonus points on shopping at select outlets
However, as the industry matures, the reward structures of these programs is beginning to shift. Experts predict that companies would require you to spend a specified amount of money within the set deadline for activating bonus points and rewards.
While in some sense, the incentives are appearing more and more attractive to the card holder, they are being asked for more significant spending on habitual shopping, such as dining, transit, and subscriptions. Ultimately, cardholders earn more on continued loyalty, but they are having to spend more than ever to attain those benefits.
The Great Market Shift
The increase in the growth of millennials and Gen-Z consumers has forced businesses to adapt to new technologies in the payment processes. Depending on contactless payment methods, millennials have boosted the prevalence of mobile point-of-sale.
These solutions accept payments from e-wallets, online transactions, and digital money. A recent survey shows 50% of the Gen-Z consumers have used e-wallets once a month, while 75% have used digital apps to make online payments.
By the end of 2024, there could be more than 16.6 million mPos terminals across the US and mobile in-store payment will project at the rate of 23.9%.
Rise of Mobile Payments
The younger generation prefers easier and more convenient ways to make purchases. They choose payment methods that function and respond according to their demands. PIN-based contactless payment via mobile devices is currently the most popular payment method among millennials and Gen-Z.
One of the contactless payment methods that is gaining traction today is Apple’s new credit card, Apple Card. After the Apple card launch, the company claims two-fold growth in transaction volume and revenue generated yearly. However, its success relates directly to the payback offers it provides to the consumers.
Apple card users receive 2% cashback on purchases via its e-wallet and 3% returns with select merchants. The rise of Apple Card has given a definitive boom to the overall digital and mobile payment industry. This also paved the way for contactless cards, which people can use in the local transit system, including various subways and metros.
Research shows that 50% of the transactions at the retail outlets are through contactless payment terminals. More than 55% of the shoppers own contactless cards and use the tap function to make the payment. The intertwining of technology and credit card payment processes are bound to grow throughout 2020.
Prevalence of Co-Branded Cards
Many payment startups and ventures have joined hands to offer a wide array of services to increase their consumer base. Such a cooperation attracts a larger number of users and creates credit cards serving an extensive range of consumer needs.
Although each credit card company offers a reward system, it has become challenging to stand out in the market due to massive competition. Thus, these mergers may provide consumers with long-term benefits and retain them for a lifetime.
Increase in Credit Cards Fee
Amid the fear of potential recession in 2019, many card issuers were cautious of their marketing and sales strategies to increase or maintain revenue. Thus, there were fewer launches and a decrease in the number of financial incentives.
The global pandemic has worsened the situation, thus tightening card issuers’ budgets as the rate of risk increased. This could lead to higher credit card fees and annual charges in 2020 to compensate for the market losses. 
Conclusion
The more you keep yourself updated with the latest trends, the higher the chances to stay financially sound, regardless of the change in the payment dynamics. This will help you to make the right choices necessary for a secure financial future.

About the writer: Lou Honick is the CEO of Host Merchant Services. Prior to founding Host Merchant Services in 2010, Lou was the founder of HostMySite.com and received numerous awards including SBA Young Entrepreneur of the Year, Inc Magazine 30 under 30, and multiple listings on the Inc 500. As a serial entrepreneur, all of his companies have operated on a singular devotion to outstanding customer service and support. Lou is a respected expert on the topics of customer service, payments and fintech, Internet technology, and entrepreneurship.

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