The global 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
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:
Global Payment Processing Solutions Market Opportunities:
Payment Processing Solutions Market Report Coverage
|Market Size in 2023:
|US$ 70.37 Bn
|Historical Data for:
|2017 to 2021
|2023 - 2030
|Forecast Period 2023 to 2030 CAGR:
|2030 Value Projection:
|US$ 156.60 Bn
PayPal Holdings Inc., PayU, SecurePay, Stripe, Inc., Apple Inc. (Apple Pay), Adyen, Alipay, Amazon Payments, Inc., Authorize.Net, Alphabet, SecurePay, ACI WORLDWIDE, WIRECARD CEE, SQUARE, INC., GOCARDLESS, FIS
|Restraints & Challenges:
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.
New product launches
Acquisition and partnerships
Figure 2. Global Payment Processing Solutions Market Share (%), by Payment Method, 2023
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