As a recent report published by Technavio details, the market for global payment gateways is set to grow 13.9% over between 2016 – 2020. A year into this period, businesses on the ground are in general agreement with this forecast, with industry giants like Walmart making moves to strengthen their eCommerce strategies. eCommerce continues to be a promising avenue for growth, and is expected to enjoy a bright future for years to come. As facilitators of eCommerce transactions, global payment gateway providers are positioning themselves to capture the growth in demand for their services.
Payment Gateways and the Growth of eCommerce
The reason that this market is enjoying such a healthy rate of growth is due to its increasingly crucial transaction technology for eCommerce exchanges. A payment gateway allows the facilitation of payments between customers shopping on websites with credit cards, eCommerce businesses, and financial institutions. It does this by encrypting payment information and authorizing those payments for the parties involved.
As traditional brick and mortar stores struggle to adapt to omnichannel retail, eCommerce is enjoying healthy growth. There are several good reasons for this. After the Great Recession, retail sales shrank, yet eCommerce sales slightly grew. Much of this can be attributed to price-conscious online shoppers constantly on the look-out for good deals, which they were able to find thanks to buyer’s market comprised of competing retailers vying for a smaller pool of consumers.
As the economy has recovered, eCommerce businesses have developed increasingly sophisticated methods of courting, converting, and retaining customers. Search engine optimization and social media participation have allowed eCommerce businesses to lower their marketing costs, while capturing more customers and delivering rich shopping experiences for those customers. Customers increasingly prefer the excellent services and enjoyable shopping experiences found with online retailers. Since the eCommerce market is growing so much, the global payment gateways market is growing in parallel to provide those transaction services for online businesses.
Challenges for Global Payment Gateway Providers
There are several developments that are posing challenges to payment gateway providers around the world. Some of these challenges pose issues for market growth, however there are other challenges that will likely help drive market growth. The emergence of open source payment gateway systems threaten to capture market share with their free services and supportive development communities. It is up to global payment gateway providers to provide services and perks that can’t be found anywhere else, and the best global payment gateway vendors will have to innovate faster than the competition.
Another formidable challenge has to do with the rise of cybercrime. Cybercrime is increasing in destructiveness, scope, and profitability, with new and sophisticated cyber-attacks being devised all the time. Payment gateway providers must provide more robust security systems if they are to win the trust of their customers. Of course, this is a challenge that is likely to drive market growth as providers compete to offer the best security features.
Who Will Come Out On Top?
Global payment gateway companies across the industry are competing to unseat industry players like Amazon Payments, PayPal, Stripe, and CCBill from their dominant positions over market share. The best global payment gateway providers will not only have solid business plans and dominant positions, but easy and convenient payment services, flexible currency handling, and strong security features. All of these services will be required by growing online retailers as they serve a global customer base in a competitive market. Whatever the next set of industry winners looks like, this is definitely a profitable market to enter into.