Payment Gateway Market Size By Type (Hosted, Non-Hosted, Local Bank Integrated), By Organization Size (SME, Large Enterprises), By Application (Travel and Hospitality, Retail & E-commerce, Media & Entertainment, Healthcare, Energy & Utilities, IT & Telecom, BFSI), COVID-19 Impact Analysis, Regional Outlook, Growth Potential, Competitive Market Share & Forecast, 2021 – 2027

Industry Trends

Payment Gateway Market size exceeded USD 20 billion in 2020 and is estimated to grow at over 15% CAGR between 2021 and 2027. Increasing demand for instant mobile-based payments and the rising use of mobile banking channels is likely to drive the industry growth. As consumers are shifting their preferences toward digital payment technologies, they expect seamless user experience in mobile wallets. Consequently, the requirement for secure & robust payment gateways to handle the upsurge in digital payment volumes is growing rapidly.
 

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The payment gateway industry landscape is characterized by the rising preference for online shopping and advent of several e-commerce platforms. Current retail trend has shown that majority of the customers in the developed and emerging nations prefer to shop online. This trend is expected to continue as more and more consumers integrate digital devices into their shopping habits, especially during the COVID-19 quarantine phase. This has led to business interruptions and financial losses globally. For instance, by 2021, about 2.14 billion shoppers are expected to shop online, compared to 1.66 billion shoppers in 2016.
 

PCI verified security spurring the hosted segment demand in the UK

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In the UK, the hosted payment gateway market revenue is poised to generate around USD 950 million by  2023. Hosted gateways direct the customers away from the merchant site’s checkout page. When the customer clicks the gateway link, they are redirected to the Payment Service Provider (PSP) page. Here, the customer fills in his or her payment details, and after paying, is redirected back to merchant’s website to complete the checkout process. Such transactions are PCI compliant and offer customers a robust fraud protection mechanism.  
 

Hosted gateways ensure that hacking and cyberattack attempts are proactively mitigated, and reputed payment gateway providers have in-built security compliant with the Payment Card Industry Data Security Standard (PCI DSS). The reduced merchant liability and reduced risk exposure have buoyed the regional market growth.
 

Increasing number of vendors accepting online payments promoting the U.S. SME market revenue

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In the U.S., the SME segment accounted for more than 30% of the payment gateway market share in 2020, as the steady rise in the number vendors using online payments. It was estimated that in 2020, nearly 70% of vendors in the U.S. accepted Apple Pay, with 25% more planning to implement it by 2021.
 

The U.S. mobile commerce market is expanding rapidly and presenting SMEs with an ever-increasing opportunity to tap into the new revenue streams. It is expected that nearly 35% share of the overall e-commerce market is through mobiles, powered by rising smartphone adoption amongst older demographics and high usage among the 18 to 24-year old age group, where smartphones enjoy a 93% penetration. Increasing presence of small to mid-size vendors on m-commerce platforms will provide lucrative market growth opportunities.
 

Continuously expanding e-commerce industry to drive Chinese retail segment growth

The retail and e-commerce application in China is set to witness a 15% CAGR through 2027 propelled by substantial addressable market size offered by the Chinese e-commerce industry. China’s e-commerce sector is nearly 25% of the country’s total retail sales volume and is anticipated to be nearly thrice as big as the U.S. market. With an ever-increasing number of online shoppers added every year, there has been an explosion in the digital payment volume, presenting payment gateway vendors with a significant market to expand.
 

According to the National Bureau of Statistics of China, while the total retail sales of consumer goods in the country declined by 3.9% in 2020, online retail sales of physical goods increased by 14.8% during the same period. While sectors, such as travel and accommodation, and restaurants services, were affected due to the lockdown and travel restrictions, a strong growth is seen in online purchases of goods, driving the reginal market demand.
 

Robust historic strength in the adoption of card-driven payment gateways fueling the Europe market

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Europe held a significant portion of the global payment gateway market with nearly 25% share in 2020. The regional market is driven by the highly saturated card adoption rate and robust payment regulatory framework. While e-wallets, banks transfers, direct debits, and other alternative payment methods (APMs) hold great promise, cards remain the dominant form of payment in the European ecommerce sector.
 

For instance, in the UK, 54% of online transactions are carried out using cards, while in France, the adoption was 45%. Cards have an advantage in that they are already a trusted and well-established system.
 

Forging strategic alliances with merchants remains the premier go-to-market strategy for payment gateway vendors

The payment gateway market remains substantially consolidated, with top six vendors holding over 70% of the market revenue share. PayPal, Stripe, and Square accounted for the major chunk of the industry. The market is characterized by intensified rivalry among major players and fueled by strategic partnerships. These partnerships allow vendors and fintech companies to tap opportunities created by the globalization of e-commerce. For instance, in July 2021, Apple announced a service that will let users pay for any Apple Pay purchase in instalments. Apple will use Goldman Sachs, its existing partner since 2019 for the Apple Card credit card, as the lender for the loans.
 

The emergence of several SMEs in the market, such as Bitpay, Dwolla, CardStream, and BlueSnap, has exerted immense strain on established players to continuously launch new products with added functionalities to maintain revenue share and profitability. Payment gateway start-ups are adopting low pricing models to penetrate various business verticals to increase their market presence, offering stiff competition to major industry rivals.
 

Some of the key players operating in the payment gateway market are 2Checkout.com, Inc. Adyen N.V., Allied Wallet, Inc., Amazon.com. Inc., Authorize.Net, Bitpay, Inc., BluePay (Clover), BlueSnap Inc., Braintree, CardStream Limited, Dwolla, Inc., Payline Data Services LLC, Payoneer Inc., PayPal Holdings Inc., PayU Group, SecurionPay (Online Payments Group Ltd), Skrill Limited, Square, Inc., Stripe, Verifone Holdings Inc., Wepay, Inc., and Worldpay, Inc.
 

This market research report on payment gateway includes in-depth coverage of the industry with estimates & forecast in terms of revenue in USD from 2016 to 2027 for the following segments:

Market, By Type

• Hosted Payment Gateway
• Non-hosted Payment Gateway
• Local Bank Integrated Payment Gateway

Market, By Organization Type

• SME
• Large Enterprises

Market, By Application

• Travel and Hospitality
• Retail & E-commerce
• Media & Entertainment
• Healthcare
• Energy & Utilities
• IT & Telecom
• BFSI
• Others

The above information has been provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Netherlands
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • ANZ
  • Singapore
• Latin America
  • Brazil
  • Mexico
  • Argentina
  • Colombia
• Middle East & Africa
  • South Africa
  • UAE
  • Saudi Arabia
  • Israel