PAYMENT PROCESSING SOLUTIONS MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

The global payment processing solutions market value for payment processing solutions is estimated at US$ 70.37 billion by 2023. It is expected to grow at a compound annual growth rate (CAGR) of 12.1% from 2023 to 2030.

Payment processing solutions enable acceptance and settlement of various payment methods for goods and services sold online, in app, or through physical retail locations. These solutions allow merchants to accept diverse payment types including credit cards, debit cards, digital wallets, bank transfers, net banking and cash or check payments. There are broadly two types of payment processing solutions - card-based payment processing and bank transfer-based payment processing.

Card-based payment processing allows customers to pay via credit cards, debit cards, and other digital payment options. Merchants can accept payments both in-person using point-of-sale (POS) terminals as well as online. Card-based payments are highly popular given the widespread use of cards, however they often come with higher transaction fees compared to other options. Additionally, delays in fund settlement can sometimes create temporary cash flow issues for businesses. Recent years have seen the rise of alternative payment options like digital wallets and buy-now-pay-later services that allow customers to pay via cards but offer merchants advantages like instant settlements.

Real-time bank transfers have emerged as a popular payment option globally. Solutions like Online Banking Transfers (OBT) and Unified Payments Interface (UPI) allow customers to pay directly from their linked bank accounts. Transactions are processed in real-time, offering merchant’s immediate access to funds. However, adoption is still growing in some markets. Lack of ubiquitous access to linked bank accounts and consumer preference for card-based transactions are some of the challenges for these payment methods.

Global Payment Processing Solutions Market Regional Insights

• North America: North America is the largest market for ghost kitchens, accounting for about 31.7% of the global market share in 2023. The region is home to some of the largest payment service providers and fintech companies such as PayPal, Square, Fiserv and Global Payments who collectively command a sizeable market share. These players have established deep penetration across enterprise and SMB client segments through their comprehensive product and service offerings.
• Asia Pacific: Asia Pacific is the second largest market for ghost kitchens, accounting for about 28.6% of the global market share in 2023. The Asia Pacific region is emerging as the fastest growing market led by countries such as China, India and Indonesia. Rapid urbanisation and increasing internet penetration have widened the potential customer base. A growing affluent middle-class demographic with rising spends has made the region an attractive proposition.
• Europe: Europe is the growing-market for ghost kitchens, accounting for about 20.2% of the global market share in 2023. Europe's payment processing landscape is diverse, influenced by local preferences, regulations, and technological innovations. Businesses aiming to operate or expand in Europe must navigate this intricate landscape by understanding regional nuances and embracing innovative payment solutions.

Figure 1. Global Payment Processing Solutions Market Share (%), by Region, 2023

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Global Payment Processing Solutions Market: Analyst’s Viewpoint

The global payment processing solutions market is poised to grow significantly over the coming years. The rising adoption of digital and contactless payments globally is a major driver as consumers prefer convenience and flexibility offered by digital modes of payment. Further, innovations in technology such as mobile point-of-sale platforms and blockchain-based payment networks will push the market forward. However, data security concerns still remain a restraint as digital payments are prone to various cyber risks.

North America currently dominates the market owing to high credit card usage and an early shift to digital commerce in countries like the US. However, Asia Pacific is expected to be the fastest growing region on the back of a huge underbanked population and rapid digitalization in countries like India and China. Within Asia, China will continue to lead the region thanks to government initiatives and prominence of digital payment platforms.

The evolving regulatory landscape around the world also opens up new opportunities for market players. For instance, tightened payment security rules in Europe will boost demand for advanced authentication and tokenization solutions. Moreover, growth of digital-first services such as online grocery and food delivery also supports market expansion. Partnerships with these online service providers will be a key focus area for payment processors going forward.

Global Payment Processing Solutions Market Drivers:

• Rising demand for integrated online payment processing solutions: As the digital realm becomes more ingrained in people's daily routines, a wide array of activities, from browsing and shopping to banking and settling bills, have shifted online. Consumers now anticipate flawless and safe payment experiences for their digital transactions. This growing expectation has spurred the demand for comprehensive online payment systems that accommodate various payment modes like debit/credit cards, internet banking, digital wallets, and UPI. These payment gateways seamlessly integrate with e-commerce sites, providing features like customization, multi-language options, adherence to contemporary security protocols, and continuous fraud monitoring. Such solutions enhance online merchants' revenue streams by ensuring an effortless checkout experience. For shoppers, having easy-to-use digital payment methods simplifies their online buying journey. The escalating trend towards online commerce and digital dealings is set to significantly propel the payment processing solutions sector.   
• Growing adoption of digital payments: Digital payments have seen phenomenal growth in recent years due to rise of mobile devices and data connectivity. Customers now expect contactless payment options that are as seamless as tapping or waving their cards, phones or other devices at store checkouts. This has prompted merchants across industry segments like retail, transportation, hospitality and entertainment to invest in payment terminals and solutions that support leading contactless payment technologies. For instance, In April 2023, as per the National Informatic Center, India's demonetization initiative had a profound effect on its economy, propelling the surge of digital payments within the nation. Before this move, digital transactions represented merely 10% of all Indian transactions. However, post-demonetization, this figure escalated to over 20%[1]. On November 8th, 2016, India's Prime Minister, Sh. Narendra Modi, declared the discontinuation of the 500- and 1,000-rupee notes, which constituted 86%[2] of the circulating cash. This decision significantly spurred the promotion and acceptance of digital platforms throughout India.
• Increasing mobile commerce: The rise of mobile commerce has been a major enabler for the growth of the global payment processing solutions market in recent years. As more consumers conduct financial transactions and make purchases through their mobile devices, the need for secure and frictionless payment options has surged significantly. Advanced technologies that can support all types of mobile payment methods from tapped/contactless to digital wallets have become essential for merchants and businesses.

Global Payment Processing Solutions Market Opportunities:

• Untapped potential of emerging economies: The untapped potential of emerging economies can open significant opportunities for global payment processing solutions in the coming years. Countries like India, Indonesia, Brazil and others are witnessing tremendous growth in internet and smartphone usage. More people in these regions now have access to digital payment options compared to a few years ago. This rise in digital and financial inclusion will drive the adoption of modern payment gateways for commerce, utilities and other daily transactions.
• Partnerships with fintech companies: Partnerships with fintech companies could provide immense opportunities for growth in the global payment processing solutions market. Fintech firms are leveraging innovative technologies like block chain, artificial intelligence and data analytics to enhance customer experience and optimize payment processes. Collaborating with such solution providers allows established payment gateways to augment their offerings and stay up-to-date with emerging trends. For instance, in November 2023, EBANX, an innovative global tech company focusing on payment solutions for emerging markets, unveiled a new product lineup. The primary aim of EBANX's latest product series is to refine and elevate the international payment experience.
• Integrating advanced technologies like block chain: Integrating advanced technologies like block chain presents a huge opportunity for the global payment processing solutions market going forward. Block chain has the potential to completely transform transaction processing and significantly boost efficiency. Being a distributed ledger technology, it allows for payments to be recorded and validated across a peer-to-peer network in a secure, transparent and immutable manner without any centralized authority. This distributed nature of block chain makes the payment process much more decentralized as compared to traditional centralized systems. It reduces the role of middlemen and introduces greater trust and transparency in transactions.

Global Payment Processing Solutions Market Trends:

Growth in real-time payments: The growth of real-time payments is having a significant impact on the global payment processing solutions market. With real-time payments, transactions are processed and settled immediately rather than taking 1-3 business days as in traditional electronic funds transfer systems. This allows individuals and businesses to transfer money in real-time with immediate availability to the recipient. This real-time capability is proving very appealing to customers and triggering significant changes in customer behavior and expectations.

For instance, in December 2023, as per PIB reports, there has been a notable surge in digital payments in recent times due to collaborative efforts between the Government and various stakeholders. Union Minister of State for Finance, Dr. Bhagwat Kisanrao Karad, highlighted this trend in a written response in the Rajya Sabha. The Minister indicated that digital payment transactions escalated from 2,071 crore in FY 2017-18 to 13,462 crore in FY 2022-23, marking a 45% CAGR. As of 11th December 2023, in the current fiscal year 2023-24, digital payment transactions have already touched 11,660 crore.Top of Form

Increasing adoption of mobile wallets: The increasing adoption of mobile wallets by consumers globally is significantly influencing the payment processing solutions market. As more people opt to make payments using their smartphones via digital wallets like Apple Pay, Google Pay and Samsung Pay, the demand for supporting payment processing infrastructure is witnessing strong growth.

Popularity of value-added services: The popularity of value-added services is significantly influencing the global payment processing solutions market. With the evolution of technology and rising consumer demand, payment providers are exploring new ways to offer enhanced consumer experiences beyond traditional payment processing. They are bundling value-added services into their offerings to drive more revenue streams and create stickier customer relationships.

Global Payment Processing Solutions Market Restrains:

Data security concerns: Data security concerns pose a significant challenge for the growth of the global payment processing solutions market. With the rise in cybercrime and data breaches targeting payment processing networks, consumers and businesses have become increasingly wary of sharing their financial data online. This diminished trust in data security takes a toll on the willingness of people to adopt new digital payment methods and transition to online shopping.

Counter Balance: Regulatory bodies worldwide are implementing stringent data protection regulations and standards to safeguard consumer information. As a result, these proactive measures not only bolster the resilience of payment networks but also rebuild trust among consumers and businesses. When individuals perceive that their financial data is well-protected and their transactions are secure, it fosters confidence and facilitates a smoother transition to innovative digital payment solutions and broader online commerce avenues.

High set up and processing fees: One of the major factors holding back the expansion of the global payment processing solutions industry is the steep setup and processing fees charged by most providers. Establishing payment acceptance capabilities for businesses requires significant upfront investment in things like point-of-sale terminals, software integrations, account setup, and technical support until operations are fully established. Moreover, per-transaction charges remain quite high percentage-wise for smaller merchants with lower sales volumes. This pricing model poses substantial barriers for micro and small businesses looking to accept digital and card-based payments. As per World Bank data from 2021, more than 90% of businesses worldwide are small to medium sized enterprises. With tight profit margins and limited capital, high fixed and variable costs associated with payment processing discourage many from adopting these solutions.

Counter Balance: As the payment processing industry becomes more competitive, many providers are innovating to offer more transparent pricing models, discounts for high-volume transactions, and tailored packages for startups and small businesses, making digital and card-based payment acceptance more accessible and affordable for all business sizes.

Lack of standardization: Lack of standardization is one of the major factors restraining the growth of the global payment processing solutions market. The absence of uniform standards for processing digital payments across different countries and regions has created interoperability issues. Payment networks, protocols, platforms and technologies differ widely in various parts of the world. This fragmented landscape leads to incompatibility between solutions and increases complexities for merchants and businesses operating in multiple international locations. integrating diverse payment solutions into their infrastructure becomes an exceedingly challenging task.

Counter Balance: The evolving fintech ecosystem is continuously working towards creating interoperable solutions through collaborative initiatives, industry standards, and technological advancements. As more global players recognize the importance of seamless cross-border transactions, there's a growing emphasis on harmonizing payment protocols and fostering collaboration among stakeholders. In essence, while standardization could streamline certain processes, the existing diversity fuels innovation and drives the development of more versatile and adaptable payment processing solutions tailored to the intricacies of different markets.

Recent Developments:

New product launches

• In September 2023, Citi Treasury and Trade Solutions offers traditional and non-traditional financing strategies such as Open Account, Letters of Credit and Documentary Collections, introduced four payment solutions tailored for Financial Institution (FI) clients, aiming to enhance the experience for their end users. This offering grants FI clients access to innovative features, all of which can be integrated with minimal to no implementation efforts or technological development.
• In August 2023, Financial Software & Systems (FSS), known for its payment solutions, unveiled its latest payment technology platform named 'Blaze'. This platform is specifically crafted to meet the requirements of banks and financial institutions.
• In April 2022, Contis enables businesses to easily provide trusted and innovative financial, introduced a fresh payments card processing solution named process.pay. This certified solution by Visa and Mastercard facilitates global processing for credit, debit, and prepaid card transactions. As Contis adapts to the shifting demands of the digital payment era, this technology represents a significant advancement in its suite of PayTech solutions.

Acquisition and partnerships

• In May 2023, Cyntexa, a premier Salesforce Consulting Partner committed to delivering innovative solutions, revealed its collaboration with MerchantE, a leading digital commerce platform providing extensive payment processing services to U.S. businesses. This alliance with MerchantE seeks to enhance the functionalities of ChargeOn, our AppExchange app crafted for effortless Salesforce payment gateway integration.

Figure 2. Global Payment Processing Solutions Market Share (%), by Payment Method, 2023

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Top Companies in Global Synchronous Optical Network Market

• PayPal Holdings Inc.
• PayU, SecurePay
• Stripe, Inc.
• Apple Inc. (Apple Pay)
• Adyen
• Alipay
• Amazon Payments, Inc.
• Net
• Alphabet
• SecurePay
• ACI WORLDWIDE
• WIRECARD CEE
• SQUARE, INC.
• GOCARDLESS
• FIS