The Payment Gateway market was valued at USD 17.2 billion in 2019 and is expected to reach USD 42.9 billion by 2025, at a CAGR of 16.43% over the forecast period (2020-2025).
The integration of payment gateway has become one of the most critical aspects of any businesses in every industry. It allows collecting money through the customer preferred bank without compromising on sensitive data.
The internet penetration is increasing rapidly across the globe. According to ITU, an estimated 4.1 billion people were using the internet in 2019, reflecting a 5.3% increase compared with 2018. Thus increasing internet penetration is driving the growth for a payment gateway market, especially in the developing countries.
Additionally, with the increasing internet penetration and awareness about the ease of online transactions, consumers are changing their preferences for making payments online. The hurdle free transactions generate confidence among the users for switching to online transactions. This rapid adoption of the online method of payment is fueling the payment gateway market growth.
On the other side, stringent regulations in the payment industry and the rising cases of cyber attacks and data breaches are restricting the growth to an extent. For instance, more than USD 500,000 was stolen by hackers in July 2019 from7pay (app for making in-store payments, developed by Japan's team).
The COVID-19 outbreak is driving the global growth of e-commerce sales, with millions of consumers worldwide in quarantine shopping for goods, services, and entertainment online. According to a study by ACI Worldwide of hundreds of transactions from global online retailers, transaction volumes in most retail sectors have witnessed a 74% rise in March 2020 compared to the same period last year, which is driving the market growth. Key Market Trends
Retail Segment to Grow Significantly
The market studied is changing in line with consumer behavior. Cashless economy, mobile banking, instant payments, digital commerce, and the growing impact of regulatory agencies are a few trends affecting the retail sector.
Online payments make the payment process easier and are more convenient for consumers, who benefit from shorter lines, cash-on-hand issue elimination, and faster moving queues.
The raging demand for online retailing across the world is expected to drive the online payment, thereby, propelling the payment gateway market over the forecast period. Furthermore, the retail companies are rigorously adding payment gateway(s) to their standalone website to fuel the consumer's order and build goodwill.
For instance, India-based PayU is considered one of the easiest eCommerce payment solutions designed to fill in the gaps left by complex service providers. PayU is favored because of its best conversion rates . Notable companies such as Netflix,Airbnb, and Bookmyshow use the PayU payment gateway.
In June 2020, India-based FSS (Financial Software and Systems), a provider of global digital payments technology and payment processor announced that it has enhanced its e-commerce payment gateway with added value service capabilities to bring more merchants online. Such initatives are expected to fuel the growrh of the market.
Asia-Pacific to Witness the Fastest Growth
Asia-Pacific is exceptionally overshadowing other regions in terms of adoption of the online transaction. This is because increase in the number of smartphone users. As per GSMA, mpbile internet penetration in Asia is set to attain a rate of 62 % in 2025 as compared to 45% in 2018.
Chinese giants, such as Alibaba and Tencent, have pioneered digital merchant payments and are instrumental in the shift away from cash in the Chinese economy. The companies' mobile payments products, Alipay and WeChat Pay, have rapidly reshaped China's payments landscape. They are also among the largest in the world.
The population of Japan is known for being early technology adopters. The Japanese are eager participants in modern e-commerce, as well as inventors of two key cashless payments technologies, near field communication (NFC) and QR codes. Consumers in the country now use credit cards as the preferred method of payment for online transactions.
Indians mostly use their digital/mobile wallets when making e-commerce purchases. According to a study by ASSOCHAM-RNCOS, mobile wallet transactions are projected to cross INR 275 trillion by 2022.
Currently, the market is highly consolidated by players, such as PayPal and Stripe. However, other companies are trying to cope with the market share and performing merger and acquisition to acquire more consumers.
January 2020 - PayU announced to acquire a controlling stake in digital credit platform PaySense. As part of the transaction, PayU's consumer lending businesses, LazyPay and PaySense, will merge their business operations to build a full-stack digital lending platform in India.
November 2019 - PayPal announced to acquire Honey Science Corporation, the makers of a deal-finding browser add-on and mobile application, for USD 4 billion. Instead of only competing on the checkout page against credit cards or Apple Pay, for instance, PayPal will now become a part of the deal discovery process, as well.
April 2019 - Stripe announced the acquisition of Touchtech Payments. It is a startup out of Ireland that works with banks to help them build and manage the verification process, which requires the customer to provide two different forms of authentication from cardholders to process transactions. This acquisition will help the company to prepare for new regulations in Europe and to improve security in online transactions.
Key Topics Covered
1 INTRODUCTION 1.1 Study Assumptions 1.2 Scope of the Study
2 RESEARCH METHODOLOGY
3 EXECUTIVE SUMMARY
4 MARKET DYNAMICS 4.1 Market Overview 4.2 Market Drivers 4.2.1 Rapidly Increasing Internet Penetration 4.2.2 Changing Preference of Users to Online Transaction 4.3 Market Restraints 4.3.1 Stringent Regulations in Payment Industry 4.3.2 Increasing Data Breaches and Cyber Attacks 4.4 Industry Value Chain Analysis 4.5 Industry Attractiveness - Porter's Five Force Analysis 4.6 Assessment of Impact of COVID-19 on the Industry
5 MARKET SEGMENTATION 5.1 Type 5.1.1 Hosted 5.1.2 Non-hosted 5.2 Enterprise Type 5.2.1 Small & Medium Enterprise (SME) 5.2.2 Large Enterprise 5.3 End-user Vertical 5.3.1 Travel 5.3.2 Retail 5.3.3 BFSI 5.3.4 Media & Entertainment 5.3.5 Other End-user Verticals 5.4 Geography 5.4.1 North America 5.4.2 Europe 5.4.3 Asia-Pacific 5.4.4 Latin America 5.4.5 Middle East & Africa
6 COMPETITIVE LANDSCAPE 6.1 Company Profiles 6.1.1 PayPal Holdings, Inc. 6.1.2 Amazon Pay (Amazon.com, Inc.) 6.1.3 Stripe, Inc. 6.1.4 Skrill Limited 6.1.5 PayU Group 6.1.6 Adyen N.V. 6.1.7 Payza 6.1.8 Ingenico Group 6.1.9 Alipay.com Co. Ltd. 6.1.10 Payoneer Inc. 6.1.11 Paytm Mobile Solutions Pvt. Ltd. 6.1.12 VeriFone Holdings, Inc.