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Sean Hinton

The once-common question "Cash or credit?" has fallen into disuse, the contemporary "Credit or debit?" stealing the title of most-asked question in checkout lines across the country. Modern technological advances have enabled cashless transactions to grow substantially in a relatively short period of time. Merchants now have fast, uninterrupted connections to global payment networks, allowing them to instantly check to see if Jane Doe can actually afford that pair of shoes or not. For customers, electronic payments allow them to avoid carrying around excess cash, offer protection in the event of loss or theft, and give them access to online retailers. The rise of the Internet has helped spur the proliferation of new payment technologies as well. Using cash or paper checks for online purchases is impractical and slow, leading to increased demand for fast, electronic payment methods.

The rise of new payment technologies has spawned the growth of an industry dedicated to processing cashless transactions. There are a large number of electronic payment processors, who serve as intermediaries between customer, merchants, and financial institutions. Additionally, both retailers and banks need special software and equipment to maintain the electronic payment network, giving rise to companies specializing in these products. As cash becomes less and less frequently used, the companies involved in executing electronic transactions could benefit substantially.

[edit] Companies involved in new payment technologies

Credit card issuers

• Mastercard (MA) offers various brands of credit and debit cards. These cards are issued by financial institutions, and MA operates the network over which transactions are communicated, charging a fee for each one.
• American Express Company (AXP) is another major credit card company. Unlike Mastercard, AXP issues its own cards, covering customers' purchases with its own money.

Electronic payment processors

The electronic payment processing market is highly fragmented, with many small processors spread across the country and world. In addition, many large financial institutions have their own payment processing divisions, though these are usually quite small. There has been an increasing amount of consolidation within this industry, however, which could lead to the emergence of fewer, larger companies as time goes on.

• First Data (FDC)
• Fidelity National Information Services (FIS)
  • FIS announced plans to purchase EFunds (EFD), a smaller company that specializes in electronic payments.
• Total System Services (TSS)
• CheckFree (CKFR)
• Global Payments (GPN)
• Euronet Worldwide (EEFT)
• Heartland Payment Systems (HPY)
• Electronic Clearing House (ECHO)
• LML Payment Systems (LMLP)

Software

• Fundtech (FNDT) provides financial transaction processing software for banks and other financial institutions.
• Transaction Systems Architects (TSAI) also offers software and various services to banks, retailers, and e-payment processors.
• Trintech Group (TTPA) is a micro-cap company that provides software designed for payment processing and funds management.

Equipment

• Hypercom (HYC) and VeriFone Holdings (PAY) both provide electronic payment processing solutions. These two companies produce electronic payment devices that allow merchants to accept credit and debit cards.

[edit] Companies negatively impacted by new payment technologies

Check printers

• Deluxe (DLX) and other printers of traditional paper checks could be harmed by increased use of new payment technologies. Deluxe estimates that check volume is declining by 4-5% per year, while electronic payment methods are accounting for a steadily larger percentage of all non-cash transactions.