That the Covid-19 led lockdown resulted in the spread of eCommerce to newer areas became evident from Amazon's recent Prime Day sales numbers in India. Now, new market research data suggests that growing internet penetration and contactless payments could double the market value of digital payments within four years.
A new research report on "Online Payment Gateway Markets" conducted by Valuates indicates that the global online payment gateway size would be worth $90,431 million by 2025, growing at a compounded annual rate of 12.8% from the levels of $43,491 million in 2019.
The factors that are expected to drive this growth included the burgeoning revenues made by the eCommerce industry in general, increasing internet penetration in hitherto underserved areas as well as contactless payments becoming the new norm leading to changing consumer preferences and practices, says the report.
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- India's digital payments decline in Q1 of 2020
- Amazon Prime Day sale turns out record numbers
The report said while North America would hold the largest market share of payment gateway markets over the next four years, Asia Pacific would emerge as the region with the fastest year on year growth. The growth in the APAC region would be driven by initiatives undertaken by governments to develop their respective internet infrastructure and growth of eCommerce.
India's digital payments had declined in the first three months of 2020. Maharashtra, Karnataka and Tamil Nadu were the top-3 states that accounted for the maximum online money transactions during January-March. However, overall volume and value of these transactions declined by 10% and 12% respectively over Q1 2019.
North America, A-PAC lead the growth
While in North America, the robust growth would be aided by technological advancements and major payment gateway implementations across several end-use segments not covered now. In addition, the growing popularity of mobile commerce would generate growth opportunities for existing and some new players, the report says.
The Covid-19 pandemic had the biggest impact on growth of digital payments and gateways during 2020 with several new products coming to the fore to meet the emerging demand for contactless transactions. With eCommerce today encompassing items of daily use such as groceries and healthcare items, digital transactions grew as did payment gateway needs.
With internet penetration growing considerably during the past couple of years across the world, eCommerce sales could be the biggest contributor to digital payments. This growth is driven by the rapid adoption of smartphones and tablets and internet connectivity through 4G, 5G, and so on. Rising eCommerce transactions are therefore expected to impact the growth of the Online Payment Gateway Market positively.
In addition, merchants worldwide are focused on expanding their businesses in other countries while collaborating with providers of payment services. These collaborations offer the benefit of leveraging opportunities created by eCommerce globalization and enabling gateway systems to be incorporated into their distribution channels. This trend is also expected to increase the Online Payment Gateway Market size.
