Payment Gateway Market Research Report: Forecast (2023-2028)

Market Definition

A Payment Gateway is an online money operating gateway that aids digital transactions by connecting buyers to sellers. It authorizes the payer's account details, including debit or credit card details, safely, ensures the availability of funds required to transfer, and eventually, by moving sensitive, thus enabling the seller to get paid the amount. Hence, a payment gateway is a digital interface for transferring money between the seller and the buyer. It is an asset to every business as it ensures secure, smooth, and hassle-free transactions. Furthermore, with technological advancements, payment gateways constantly evolve per new customers' demands and preferences.

Market Insight

The Global Payment Gateway Market is projected to grow at a CAGR of around 20% during the forecast period, i.e., 2023-28. The market growth can be accredited to the rapid adoption of smartphone-based payments encouraged by the expanding e-commerce platforms. Consequently, sellers and buyers collectively rely on digital transaction channels for more accessible, safe, and hassle-free transactions, which, in turn, prompts the further adoption of such gateways in the coming years.

Besides, to strengthen the digital payment infrastructure, e-commerce companies look forward to collaborating with payment transaction gateway providers, resulting in a substantial shift in transaction mode. In addition, the increasing adoption of mobile-based apps pushing digital fund transfers also emerges as an opportunistic area for tech giants. However, these online transactions are required to be safe and secure. Thus, these app companies are constantly looking for trustworthy gateways that help prevent credit and debit card scams and other fraudulent activities, thereby eliminating the need to deal with the hassle for the sender and receiver while making cash transactions.

In addition, as consumers shift to online payment transactions, the expectation of a perfect user experience and minimal time taken during payment processing is expected and demanded. This is likely to augment the need for advanced and user-friendly payment gateways in the coming years. Therefore, the key players might use feedback methodology to make the current digital transaction pathway even more feasible and in line with the ever-changing advancements in IoT and artificial intelligence. Such feedback can be attained through user insights, waiting time, studying the pattern of payment, and adding additional features and modifications to the current system. With stiffening competition among the existing market players and various new entrants within the industry, the market is likely to benefit globally.

Market Dynamics

Key Driver: Online Shopping Trends and Government Initiatives Promoting Digital Transactions

A notable shift in shopping patterns with growing internet penetration has led to the large-scale adoption of payment gateways in recent years. In addition, numerous government initiatives encouraging digital transactions further promote such extensive adoption, citing it as vital for the country’s economy in terms of maximized revenues, transparency, and ICT technologies. As such, initiatives like the Unified Payment Interface (UPI) launched by the Indian government and the promotion of ePayments by the Monetary Authority Singapore (MAS) have fueled market growth. Moreover, over the past few years, retailers have evolved into taking all forms of payment options available owing to the tangible presence of smartphones and cards. Thus retailers are putting efforts into employing innovative mobile transaction solutions, risk management, and customer service to stay in line with modern payment solutions. Backed by these aspects, the industry is expected to expand its horizon in the coming years.

Possible Restraint: Lack of Standardized Regulations for International Transactions

Businesses continuously purchase goods and services from around the world and across countries. However, due to the lack of standardized global regulations and varying government restrictions, digital payment and transaction providers fail to make the most out of the such opportunity. Payment and data storage requirements varying from country to country are becoming obstacles to efficient cross-border payments. Moreover, the local payment infrastructure of many countries needs to be at par to handle international transactions. Given the independent development of payment systems, the need for standardized regulation and automation across inter-bank and intra-bank networks is rising to prevent cyber-attacks, thereby impeding industry growth.

Growth Opportunity: Intensifying Financial Inclusion worldwide

A considerable rural and pastoral population is yet to benefit from online transactions or even traditional banking. Citing this, developmental sectors and the government has recognized the need to provide financial services to the people living in rural and remote locations. Since the lack of digital literacy is a barrier to providing connectivity and promoting financial inclusion, various governments are aiding in digitalizing and bringing resources and services to the rural sector. Here, digital payments are essential as people can open a bank account and transact through their smartphones. The introduction of digital wallets also allures people to turn towards digital banking. This increasing adoption of banking accounts and digital wallets provides a growth opportunity for the industry.

Key Trend: Digitalization of Businesses and Enterprises

The rapid adoption of digital marketing for businesses to maintain an online presence has resulted in increased online transactions as firms are keen to digitalize their payment methods. Moreover, with progressing technological advancements, companies look forward to offering their clients and customers novel digital services. These advancements have collectively led to increased online payment modes through debit or credit cards, digital wallets, and net banking.

On the other hand, consumers rely heavily on online services such as ticket booking websites instead of traditional methods. Additionally, banks nowadays are collaborating with companies and enterprises to provide lucrative customer offers and attract more users. Backed by these aspects, the global payment gateway industry is anticipated to expand during the forecast years.

Market Segmentation

Based on Type

• Hosted
• Self-hosted
• Bank Integrated

Of these three, the Hosted type acquired a larger market share and is expected to grow further in the forecast years. Hosted gateway is a third-party checkout system that directs clients to the payment service provider’s (PSP) website. Because of easy payment processing, reduced merchant liability, and third-party payment service handling the entire transaction process while providing enhanced data protection and security, the demand for hosted payment gateways is upscaling. Along with it, hosted payment gateways also reduce fraudulent activities, as hosted gateway complies with the Payment Card Industry Data Security Standard (PCI DSS) and becomes a safer and more secure transaction option. As such, hosted type remains a solution for utilities looking for a solution that facilitates continued usage of dependable online billing and payments, thereby dominating the market in the coming years.

Based on Enterprise Size

• Small and Medium Enterprise
• Large Enterprise

Here, Large enterprises garnered the maximum share of the Global Payment Gateway Market, and the same trend is likely to prevail from 2023 to 28. It owes to a higher need to imply effective solutions for their customers visiting their websites, as they have a higher number of customer visits and dependency on a diversified product portfolio, high level of security, and payment transactions. Moreover, payment transaction solutions can ensure a convenient checkout process for consumers with supporting digital payment methods, including cards and net banking. Customers' trust in such gateways as a reliable digital transaction medium protects sensitive customer and merchant data and boosts customer enterprise interaction, further elevating the market.

Additionally, due to people's preference for online shopping, huge enterprises play a crucial role in e-commerce and online transaction. The enterprise gateway payments medium enables financial institutions to simplify the payment process and execute the transfer on a single, integrated, real-time platform. With the demand for transactions in large enterprises, the market is likely to elevate further.

Regional Projection

Geographically, the Global Payment Gateway Market expands across:

• North America
• South America
• Europe
• Middle East & Africa
• Asia-Pacific

Here, the Asia-Pacific is expected to be the fastest-growing marketplace in the forecast years. This growth can be attributed to several government initiatives targeted at digitalizing the banking and transaction infrastructure with added modification of enhanced online payment infrastructure. Furthermore, with expanding digital rate of industrialization, the Asia-Pacific populace is obliged to use digital gadgets, especially smartphones, to regulate their daily and professional lifestyle. This would lead to further market expansion, as the public would lean towards online transactions more.

Additionally, the governments of several countries have taken further initiatives to fuel the process of digitalized money transactions. For instance, the Reserve Bank of India(RB) has regulated gateways such as Bharat Pay and Paytm. Likewise, the Chinese government is working towards improving internet access in rural areas after reshaping china’s payment landscape through Alipay and WeChat Pay. Similarly, as early technology adopters, Japan is experiencing continuous growth in the adoption of credit cards in online transactions. These initiatives and the region's large population add volume to the transaction. Besides, domestic & international enterprises investing in this region are the stepping stones towards further expansion of the industry.

On the other hand, Europe expects notable growth during the projected period with the rising acceptance of credit and debit cards and the choice of eighty various payment mechanisms by European businesses, presenting potential growth of the European market.

• In February 2022, Amazon partnered with SugarBox Networks and Simpl to authorize payments in line with the progressive digital India vision.

Recent Developments in the Global Payment Gateway Market

• In January 2022, Adyen N.V. Inc launched a mobile point-of-sale portfolio in the E.U., the U.S., and the U.K.
• In December 2020, Amazon introduced Amazon Payment Services in the middle east and north Africa.
• In January 2020, Paypal Holdings partnered with Union Pay International (UPI) to accelerate the growth of their networks.

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