In today's rapidly evolving fintech sector, payment processing brands fall into two key categories: incumbents and challengers. Understanding these differences helps businesses select solutions that align with their needs and growth strategies.
Understanding the Divide
What Makes an Incumbent?
Incumbent payment brands are established companies with significant market history and substantial market share operating on legacy infrastructure.
Key Characteristics:
- Extensive market penetration and established business partnerships
- Complex approval processes that often slow innovation
- Strong regulatory compliance frameworks built over decades
- Primary focus on large enterprises and long-term customers
- Higher barriers to entry for new merchants
- Comprehensive but sometimes inflexible solution offerings
- Well-established risk management systems
What Defines a Challenger?
Challenger payment brands are newer market entrants focused on disrupting traditional payment systems through technological innovation.
Key Characteristics:
- Built on modern, agile technology (cloud-native, API-first platforms)
- Rapid development cycles and faster feature deployment
- Focus on underserved markets, particularly small businesses
- Enhanced user experience and simplified onboarding
- Transparent, often more competitive pricing structures
- Greater specialisation in specific market segments
- More adaptable to emerging payment technologies
The Incumbent Players
Barclaycard
One of the UK's first credit card companies, Barclaycard has maintained its position since 1966. With operations in 60+ countries and over 10 million UK customers, Barclaycard leverages extensive banking infrastructure to offer comprehensive payment solutions. While attempting to adapt to changing markets, it maintains incumbent characteristics of slower innovation cycles and complex integration requirements.
Worldpay
Founded in 1989 as Streamline, Worldpay handles approximately 40 billion transactions annually across 146+ countries. Following its £43 billion acquisition by FIS in 2019, Worldpay continues to focus on stability and global scalability rather than disruptive innovation, solidifying its incumbent position.
Lloyds
Lloyds Bank Cardnet represents the merchant services arm of one of Britain's oldest financial institutions (est. 1765). They focus on providing robust payment solutions integrated with broader banking services, emphasising security and reliability but typically involving longer setup times and more complex contractual arrangements.
Global Payments
Operating since 1967, Global Payments serves 3.5+ million merchants worldwide. The company excels in offering comprehensive solutions for larger businesses with complex needs, particularly in specialised sectors like healthcare and education. Global Payments has expanded through strategic acquisitions, including Takepayments, though they often allow acquired brands to maintain their market positioning.
Elavon
Founded in 1991 and operating as a U.S. Bank subsidiary, Elavon processes over 3 billion transactions annually. They've built their reputation on dependable processing for mid-sized to large businesses, with strong positions in hospitality and retail sectors.
Allied Irish Banks (AIB)
As a traditional bank with a significant history in Ireland, AIB offers merchant services as part of its comprehensive financial offerings. They leverage their banking relationships to provide integrated payment solutions, primarily focused on established businesses within their market.
Fiserv
A global fintech and payments giant founded in 1984, Fiserv provides financial services technology to banks, credit unions, securities processing organisations, and other financial institutions. Following its acquisition of First Data in 2019 for £22 billion, Fiserv strengthened its position in the payments ecosystem. The company owns the Clover point-of-sale system, which despite its modern design and features, operates within Fiserv's incumbent framework of established distribution channels and enterprise-focused strategies.
The Challenger Brands
Stripe
Founded in 2010, Stripe revolutionised online payments with its developer-friendly API approach. Now valued at over £95 billion, Stripe processes hundreds of billions in transactions annually while maintaining its innovation-first approach. Their platform emphasises simplicity, offering businesses the ability to accept payments within minutes instead of weeks.
Tyl
Launched by NatWest in 2019, Tyl combines the security of a major bank with the agility of a fintech startup. They focus on quick merchant onboarding and transparent pricing, specifically targeting small to medium businesses that traditional providers often overlook.
Square
Founded in 2009, Square transformed payment processing with its iconic square-shaped card reader. Their ecosystem now encompasses point-of-sale software, e-commerce tools, and business financing, serving millions of small merchants globally with an emphasis on accessibility and integration.
Zettle (formerly iZettle)
Founded in 2010 and acquired by PayPal in 2018 for £2.2 billion, Zettle pioneered mobile card acceptance in Europe. They maintain their challenger approach by focusing on small businesses with user-friendly hardware and software solutions designed for merchants with minimal technical expertise.
SumUp
Founded in 2012, SumUp serves over 3 million merchants across 30+ countries with its affordable card readers and simple pricing model. They've gained traction by eliminating monthly fees and complex contracts, making card acceptance accessible to micro-businesses.
Takepayments
Despite being acquired by Global Payments, Takepayments continues to position itself with a challenger identity through transparent pricing and SME-focused services. They differentiate by offering personalised support and flexible contracts without the complexity typical of incumbent providers, though their operational backing now comes from an established incumbent.
Paymentsense
Founded in 2006, Paymentsense has grown to serve over 70,000 small businesses with its competitive rates and personalised approach. They emphasise direct customer relationships and rapid approval processes as alternatives to traditional acquirers. Paymentsense later launched Dojo as their next-generation payment solution, demonstrating how established challengers can create new brands to maintain their disruptive positioning.
Dojo
Originally developed by Paymentsense, Dojo has been positioned as an innovative payment solution focused on speed and simplicity with next-day settlements and modern hardware design. Their tech-forward approach prioritises user experience and integration with popular point-of-sale systems, despite having the backing of a more established payments company.
Why Categorisation Matters
Understanding whether a payment provider operates as an incumbent or challenger helps predict their approach to:
- Contract flexibility and commitment periods
- Implementation timelines and technical requirements
- Pricing structures and negotiation possibilities
- Support models and account management
The most suitable provider depends on your business size, industry, technical capabilities, and growth trajectory. While incumbents offer stability and comprehensive features, challengers provide agility and often better serve smaller or growing businesses with their innovative approaches.
The Complexity of Acquisitions
The payments industry has seen significant consolidation, raising important questions about how acquisitions affect market categorisation:
Parent Company vs Brand Identity:When a challenger brand is acquired by an incumbent (like Takepayments by Global Payments or Clover by Fiserv), the categorisation becomes more nuanced. The ownership structure may change, but the market positioning often remains aligned with the brand's original ethos.
Key Factors That Determine Post-Acquisition Categorisation:
- Whether the acquired company maintains operational independence
- If the original target market and value proposition remain unchanged
- The extent to which the parent company's processes are imposed
- Whether the customer experience remains aligned with the original brand promise
For example, Clover, despite its modern interface and small business appeal, operates within Fiserv's incumbent distribution framework and enterprise strategies. Conversely, Takepayments continues to operate with challenger characteristics despite Global Payments ownership. Similarly, while Dojo emerged from Paymentsense, both maintain challenger positioning through their focus on innovation and small business needs.
In the rapidly evolving payments landscape, understanding these nuances helps businesses select partners that align with their specific requirements, regardless of underlying ownership structures.