Global Online Payment Gateway Market Research Report, By Type (Pro/Self-Hosted Payment Gateways, Local Bank Integrates, Platform-Based Payment Gateway Solution, Others), By Application (Micro and Small Enterprises, Large Enterprises, Mid-Size Enterprises) - Forecast till 2027

Online Payment Gateway – Summary

Transforming urbanscape at a breakneck speed, along with industrialization enjoying a paradigmatic shift, has spurred innovations that assist people in using their disposable income to the fullest without spending much time on it. One such innovation is online payment gateway that gives consumers an unprecedented advantage in buying products where they don’t have to depend much on visiting the actual retailers or service providers and in return, they get served at their doorstep. The gateway is a service provided by e-commerce application service providers using on-cloud services. The service facilitates smooth payment transactions by sharing information between the payment portal and the front-end or bank processor. The technology has impacted the market so profoundly by complimenting the daily needs of the populace that it can now witness a doubling of the market valuation during the forecast period (2018-2023). From USD 61.8 Bn to USD 124.64 Bn with a stellar CAGR of 12.8% may seem a tad too high but its increasing popularity measured by the requisite parameters is predicting excellent prospects in the coming years, reveals Market Research Future (MRFR) in a detailed study.

Drivers and Restraints:

Digital transactions using credit cards, debit cards, net banking and other facilities such as PayPal is getting precedence as they lessen the hassles related to actual real-time payment or deposit. Advancing e-commerce is transforming retail businesses and is gaining traction among the start-ups and corporates. Governments are also encouraging the use of digital payments. The market is getting a further boost from the rising ownership of smartphones and tablets that have enabled many to access this digitalization of payment.

Convenience, accessibility, and security are features that most consider while using payment methods and online payment gateways have successfully cemented their place in providing clients with much safer options. The interfaces are also quite user-friendly further bettering the experience of the end-users. In addition, the service providers are giving out benefits such as lucrative margins while booking tickets and buying other things. Service providers such as PayPal has redefined the market by becoming a source of payment for charities, an initiative later followed by others like Paytm.

However, security concerns regarding online payments are still not promising a hundred percent safe passage. The number of cyber attacks is on the rise owing to which a lot are not convinced yet to switch over to this sector which can become a market deterrent during the review period.

Segmentation:

By type, the market is segmented into pro/self-hosted payment gateways, local bank integrates, platform-based payment gateway solutions, and others. Platform-based payment gateway solution is currently leading the pack and is expected to do so with the highest CAGR of 13.7% during the forecast period (2018-2023). The market is witnessing growth owing merchants preferring a platform to sell their products directly to the users.

Application-based segmentation of the market includes micro & small enterprise, large enterprise, and mid-size enterprise. Large enterprises are gaining the most out of this system and can ensure a 12.8% CAGR during the forecast period. Features such as Instant payment, quick & easy setup, credibility for merchants, merchant reliability, and recurring payments are guiding the success of large enterprises further. However, mid-size enterprises have realized the market potential and how it can benefit them. Seeking benefits from PayPal, Amazon Payments, and others they are now set to record the highest CAGR of 14.1%.

Regional Analysis:

Geographically, the market spans across North America, Europe, Asia Pacific (APAC), and the Rest-of-the-World (RoW).

North America is leading the market from the front with a present market value of USD 22.5 billion that can reach up to USD 54.08billion growing at a CAGR of 16.1% during the forecast period. Technological advancement in the region has ensured such substantial growth, and it got ample support from the region’s tendency to adopt latest technologies faster than any other region. The U.S. alone is expected to contribute USD 42.42 billion in the same period with a staggering CAGR of 17.3%.

Europe assumes the second post with a grasp over USD 15.76 billion which can reach USD 32.51 billion during the review period with a CAGR of 13.1%. Technological superiority has safeguarded its prospect, and the U.K. is to gain the most as it can reach a valuation of USD 11.99 billion during the same period.

Competition Dashboard:

The online payment method has gained significant momentum from the retail sector. As it offers free service, various companies are trying to cash in the most from this development. Google Wallet is one such fast and efficient payment method. Major banks in the U.S. such as JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp have come together to create a transfer platform named clearXchange. Faster mobile checkout and increased protection during the transaction are further strengthening online payment gateways stronghold.

Key players dominating the market are PayPal Holdings, Inc. (US), Stripe (US), Amazon.com, Inc. (US), Visa, Inc. (US), Worldpay, Inc. (US), Adyen NV (Netherlands), CCBill, LLC (US), 2Checkout.com, Inc. (US), First Data Corp. (US), SecurePay Pty Ltd. (Australia), Naspers Ltd. (South Africa), Verizon Communications, Inc. (US), GMO Payment Gateway, Inc. (Japan), Alibaba Group Holding Ltd. (China), Tencent Holdings Ltd. (China), CASHU (UAE), Wirecard AG (Germany), Global Payments, Inc. (US), and others.

Growing use of smartphones for online payments is driving the online payment gateway market creating a highly competitive landscape.

The global online payment gateway ecosystem consists of various global, regional, and local service providers that are continuously evolving to enhance their market position. Intense competition and rapid advances in technology to cope with the security concerns are key factors that aid the market growth. The service providers compete based on cost, efficiency, security, and reliability of the services to sustain in the market. It is important for the service providers to provide a cost-efficient and secure online payment gateway, to maintain their market position and gain a competitive advantage.

Vendors in the online payment gateway market are focusing towards improving their services and expanding geographically into the under-developed and developing economies. PayPal Holdings, Inc., Visa, Inc., First Data Corp., Naspers Ltd., and Global Payments, Inc. are the major companies in the market, competing in terms of customization, reliability, price, and technology. Their primary focus is on the development of improved online payment gateways for faster and secure transaction processes. Although international players are dominating the market, regional and foreign players such as PagBrasil and CASHU with small market shares also have a prominent presence here. The major players may strengthen their presence worldwide through the acquisition of local and regional players for expanding their services in those regions during the forecast period. The improvement of the global economic scenario combined with technological advancement in the emerging economies like Brazil, Argentina, and other under-developed countries, is likely to fuel the market growth, thereby making it an ideal time to expand online payment gateway market geographically and increase the global market share.

PayPal Holdings, Inc. is one of the prominent players in the online payment gateway market, holding 9.57% share. PayPal provides businesses with a platform enabling various payment methods for transactions. This has enabled PayPal to gain a competitive advantage in the online payment market in terms of service and user accessibility, and hence, is leading the online payment gateway market. Moreover, PayPal focuses on expanding its market reach by partnering with local banks and attracting customers to use their services. PayPal has also started offering customers with attractive offers such as cashback, using advertisements on different media platforms.

Visa, Inc. held a share of 8.66% in 2017. Visa is completely into commerce and has a huge network of consumers, merchants, financial institutions, businesses, strategic partners, and government entities. To provide its customers with an efficient online payment platform, the company has acquired Authorize.Net, a payment gateway that allows e-commerce providers to accept payments through credit cards and electronic checks directly on their site.

First Data Corp. held a share of 7.44% in 2017. First Data’s strategic acquisitions have enabled the expansion of its market reach to the countries of the Asia-Pacific region. Moreover, partnerships with e-commerce companies have provided First Data with a network full of retailers and financial institutions, enabling it to penetrate the online payment gateway market.

Naspers Ltd. held a share of 5.5% in 2017. Naspers acquired PayU to provide its users with a secure, anti-fraud payment platform. Recently, PayU launched a new platform, PayUnow, for small and medium businesses (SMBs). This new platform is expected to enable offline businesses to create an online identity with their own business page, where they can accept digital payments directly into their bank accounts.

Global Payments, Inc. held a share of 5.09% in 2017, providing its services across a variety of channels to merchants and partners in countries across the Americas, Europe, and Asia-Pacific. Acquisition of Realex Payments, one of Europe's largest and fastest growing payment gateways, has enabled Global Payments to provide omnichannel solutions that combine gateway services, payment service provisioning, and merchant acquiring across Europe.

The service providers with better technical and financial resources focus on innovation to develop highly secure payment platforms that enable users with easy-to-understand interface to stay competitive in the market. Therefore, service providers must innovate and make use of new technologies to stay abreast of the emerging technologies that could affect the continuing competitiveness of their services in the market.