Payment Gateway Market 2023 - 2030 By Enterprise Size (Large Enterprise, Small & Medium Enterprises), Type (Hosted, Non-hosted), End Use (BFSI, Retail & E-commerce) - Partner & Customer Ecosystem (Product Services, Proposition & Key Features) Competitive Index & Regional Footprints by MarketDigits
Industry : Information Technology | Pages : 179 Pages | Published On : Jul 2023
The payment gateway market witnessed substantial growth, with a value of USD 26.79 billion in 2022, and is projected to grow at a CAGR of 22.2% from 2023 to 2030. The market expansion is primarily driven by the increasing demand for mobile-based payments worldwide. Factors such as rising e-commerce sales and global internet penetration further contribute to the market's growth. The preference of both merchants and consumers for digital channels in conducting online money transfers is also expected to propel market growth in the coming years.
Payment gateways play a crucial role in providing secure internet transactions, preventing credit card scams, and reducing fraudulent activities. They encrypt sensitive information and enable secure transfer from customers to issuing banks. By eliminating the need for physical store visits and long queues, payment gateways offer consumers a convenient and seamless online shopping experience.
Technological advancements and the widespread availability of the internet have enabled financial service providers to offer innovative digital services to customers. The increasing popularity of mobile-based apps for money transfers further drives the demand for internet banking. Governments worldwide are investing in rural internet services to promote internet access, with initiatives such as the British government's investment of USD 5.9 billion in fast broadband services. This investment is expected to provide 4G coverage to 95% of rural areas in the near future through the shared rural mobile phone network project, which received USD 606.3 million investment in 2020.
E-commerce companies are partnering with payment service providers to establish a digital payments infrastructure for merchants and customers. The integration of payment gateway systems into sales channels allows merchants to handle large transaction volumes efficiently. For example, PayU, a payment gateway service provider, collaborated with WooCommerce, a customizable e-commerce platform, to offer WooCommerce merchants a digital payment infrastructure and streamline business processes. This partnership enables merchants to access contactless payment solutions, enhance profitability and growth, and benefit from exclusive pricing and transparent transaction charges.
Banks worldwide are also entering into partnerships with payment gateway service providers to offer real-time payment facilities to consumers and merchants. Yes Bank, for instance, collaborated with Amazon Pay and Amazon Web Services (AWS) to facilitate real-time payments through the Unified Payment Interface (UPI) transaction facility. This collaboration enables UPI-based inter-bank transactions and peer-to-peer network transactions through the Yes Bank digital payment platform.
COVID-19 Impact Analysis:
The COVID-19 pandemic has had a positive impact on market growth, driven by the increasing consumer preference for e-commerce, digital payments, quick payments, and the trend of reduced cash usage. The pandemic has witnessed significant growth in the e-commerce space, with a 13%-20% increase in the number of customers preferring online purchases. Additionally, individuals have become more reliant on mobile and internet services during the pandemic as they connect with payment gateways and other online platforms.
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In 2022, the hosted segment dominated the market, accounting for over 57.0% of the global revenue. The demand for hosted payment gateways is increasing among merchants due to their easy setup systems and reduced merchant liability. Hosted gateways ensure that third-party payment service providers handle the entire transaction process, offering enhanced security and data protection. They also enable merchants to reduce fraudulent activities and focus on their core offerings. Moreover, hosted gateways comply with the Payment Card Industry Data Security Standard (PCI DSS), making them a safer option for payment processing.
The non-hosted segment is expected to experience significant growth during the forecast period. Many merchants prefer non-hosted payment gateways for their websites as they retain control over the entire checkout process, including layout and design, while providing a seamless shopping experience to customers. Using APIs, merchants can enable customers to enter their debit or credit card information directly on the checkout page for payment processing. Additionally, non-hosted gateways can be integrated with online payment solutions using APIs on any device, creating growth opportunities for the segment.
Enterprise Size Insights:
The large enterprise segment dominated the market in 2022, accounting for over 56.0% of the global revenue. Large enterprises, with higher customer visits to their websites, require effective solutions for a smooth checkout process. Payment gateway solutions ensure a convenient checkout experience by supporting various digital payment methods, including net banking and credit or debit cards. Moreover, large enterprises demand highly secure transaction modes, which reliable payment gateways provide through industry-standard encryption and protection of sensitive customer and merchant data.
The small and medium enterprises segment is expected to register the highest growth during the forecast period. Small and medium enterprises are adopting payment gateways for faster payment processing and to offer increased convenience to customers. Many small and medium enterprises are restructuring their revenue strategies and business models by embracing a more digital approach. This shift is anticipated to drive the growth prospects of the segment in the near future.
In 2022, the retail and e-commerce segment dominated the market, accounting for over 26.0% of the global revenue. The growth in this segment is driven by the increasing number of online transactions in retail and e-commerce businesses worldwide. According to Oberlo, a drop-shipping solutions company, the retail industry is projected to grow at an average annual rate of 3.58% from 2018 to 2022. The growing demand for online retailing globally is expected to fuel market growth in the forecast period.
The BFSI (Banking, Financial Services, and Insurance) segment is anticipated to witness significant growth during the forecast period. The BFSI sector widely adopts payment gateway systems as they provide an end-to-end ecosystem for financial services. Financial companies face complex cash flows, collecting cash from multiple sources and routing it to various accounts. Gateway systems help these companies manage money movement efficiently through a single dashboard.
North America dominated the market in 2022, accounting for over 36.0% of the global revenue. The growth in this region can be attributed to technological advancements and the widespread application of payment gateways in flourishing end-use segments such as retail and e-commerce. The presence of prominent players like Square, PayPal Holdings Inc., Mastercard, BluePay, and Amazon Payments Inc. further drives market growth. According to Oberlo, sales in the U.S. retail sector were expected to grow by 2.3% in 2021 and increase to 4.1% in 2022.
Asia Pacific is projected to emerge as the fastest-growing regional market during the forecast period. The growth in this region can be attributed to various government initiatives aimed at improving the online payment infrastructure in Asian Pacific countries. For example, the Reserve Bank of India (RBI) in India has regulated gateways such as Bharat Bill Pay, Paytm, and Mobikwik to enable effective digital payments. The Chinese government is also focusing on improving internet access in rural areas, creating growth opportunities for the market.
Key Companies & Market Share Insights:
Vendors in the market are focusing on acquisitions and expanding their product and service portfolios in untapped industries. For example, in October 2020, Stripe, a financial service company, acquired Paystack, an online payment processing company operating in Nigeria with plans for expansion across South Africa. Through this acquisition, Stripe extended its presence in Africa, leveraging Paystack's offerings alongside its own.
To address security concerns related to online payments, service providers are adopting advanced technologies and solutions to mitigate fraudulent activities. New product developments and collaborations are key strategies adopted by players to gain a competitive edge in the market. For instance, in May 2021, Stripe partnered with GrabPay, a provider of payment solutions to businesses.
- Amazon Payments Inc.
- Bitpay, Inc.
- PayPal Holdings, Inc.
- PayU Group
- Verifone Holdings, Inc.
- Wepay, Inc.
Segments Covered in the Report
The report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2023 to 2030. For the purpose of this study, Grand View Research has segmented the global payment gateway market report based on type, enterprise size, end-use, and region:
Type Outlook (Revenue, USD Billion, 2023 - 2030)
Enterprise Size Outlook (Revenue, USD Billion, 2023 - 2030)
- Large Enterprises
- Small & Medium Enterprises
End-use Outlook (Revenue, USD Billion, 2023 - 2030)
- Media & Entertainment
- Retail & E-commerce
- Travel & Hospitality
Regional Outlook (Revenue, USD Billion, 2023 - 2030)
Middle East & Africa
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