Glenbrook’s Payments Systems and Domains Analysis

by Carol Coye Benson on June 18, 2009

in Carol Coye Benson, Glenbrook

Carol Coye Benson

Each year, Glenbrook attempts the impossible – to create a simple table showing U.S. payments system volumes, by both “amount” (dollar value) and “count” (number of transactions) – all mapped to payments domains. We use the term “domain” to refer to the purpose of the payment – so that purchases at the point of sale, bill payment, person-to-person payments, etc. are domains.

This year’s analysis, of calendar year 2008, again highlights areas of enormous opportunity for providers of payments systems and services. The sheer volume of checks still dominating the B2B payments domain is the most obvious – but there are other opportunities – such as for ACH at the point of sale – that are equally intriguing.

Building this table is not an easy task! Some payments systems publish numbers, others don’t. It is rare for systems to publish numbers that can translate directly into domains – the ACH network gets credit for doing the best job of that. Pundits and analysts do their own estimates – usually within domains – but it’s tricky to get definitions right (or at least aligned).

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Why do we do this exercise? To start with, we like to take a comprehensive view of the payments industry. Our Payments Boot Camps and Private Workshops help payments professionals and outsiders to the payments industry understand how the industry works and how it is changing. An important element of this change is the move by payments systems into new domains – think of ACH based eCommerce purchases, or PIN debit for online bill payment.

Secondly, Glenbrook’s payments strategy consulting business serves clients that are providing solutions in the industry (card networks, processors, banks, payments service providers, technology firms), or are users of payments services (merchants, corporate treasury staffs, billers). Many companies which are successful within one square of our grid are interested in expanding into others – we help these client evaluate their opportunities and develop strategies for attacking them. Seen this way, the Payments Systems and Domains grid is a map to the profit pools available in the business.

Please contact me with your comments. We’d also like your insight! Let us know if you have a better way of quantifying our empty squares or enhancing our assumptions. We would appreciate your collaboration – we really enjoy the collective power of the network of payments professionals that we work with at Glenbrook.

3 Responses to “Glenbrook’s Payments Systems and Domains Analysis”

  1. I’ve had quite a few inquiries about the totals on the grid. Because this is a payments system view, and not what I would call an economic view, there is double counting. So an ACH transaction to pay a credit card bill shows up as ACH Bill Payment, but the same underlying transaction shows up as a credit card transaction (in any of a number of columns). Similarly, when a merchant acquirer settles credit card transactions with a merchant, it would show up in the B2B ACH column – while the underlying credit card transaction would appear on that row in any one of a number of columns. Finally, there is a lot of double counting within the B2B domain, as any given economic transaction may result in multiple payments systems flows.

    Why don’t we attempt to eliminate the apparent double counting? Because, from a payments system view, these are all “real” transactions – they generate revenue, expense, and risk to the parties involved in providing and using the systems.

    Whew! But thanks for the comments, keep them coming.

    Carol Benson

  2. Tom Ferro says:

    I am interested in finding out if you have sized the market in terms of number of merchants or online sites in total, the share that take payments of any type, and the share which accept plastic (any sort of debit/credit or prepaid product on the Amex, Discover/Diners, MC and Visa networks). I think the card networks tend to overestimate their acceptance as a percentage of merchants (online and offline), with the chief offenders being Amex and Discover.

  3. Tom – see our partner Russ Jones’ posting today

    Glenbrook does a lot of in-depth work on eCommerce payments acceptance.


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