B. MARKET GROWTH ACCELERATING
• Check guarantee and credit card authorization services are expected to grow at a combined average annual growth rate (AAGR) of 20% over the next five years, barring economic recession. However, market forces and economic conditions could combine to raise this compound growth to exceed 30% annually during the last half of the forecast period. Annual 1990 expenditures will reach $1.65 billion.
Credit card authorization services (CCAS) currently comprise nearly 55% of the current market. Although credit card transaction volume will increase less than 3% annually, the portion of total transactions processed by authorization services will rise from approximately 25% to in excess of 50%.
• Increases in the proportion of total transactions which are processed electronically (as opposed to voice), heavy competition, and economies of scale resulting in transaction price and volume discounts will limit total expenditure growth to 17% annually.
• Expenditures for check verification/guarantee services (CGS) will capture the major portion (51%) of total expenditures in 1990. CGS will benefit from the rapidly increasing base of credit card authorization terminals, which are designed to handle both credit card and check transactions.
• Competition and economies of scale similar to those for credit card authorization services will limit expenditure growth to 23% annually over the forecast period.