Rising interest rates, inflation, increasing housing/rent prices, and shipping and logistical bottlenecks continue to afflict the global economy. TSG’s recent consumer survey efforts suggest cracks in the foundation are imminent. Of 1,000 survey participants, about 60% indicated they planned to spend the same or more than they had the prior year during the holidays. This was compared to 78% in 2021 and 64% in 2020.
Despite this gradual downturn in presumed spending behavior, one characteristic of consumer spending has maintained its popularity since the onset of the global pandemic two and a half years ago – the increasing consumer preference to purchase goods and services online.
Initially fueled by necessity, now by convenience, an ever-increasing amount of frictionless virtual payment options (BNPL, crypto, QR, digital wallets, Click to Pay) have continued to influence the prevalence of eCommerce as a preferred avenue for nonessential consumer spending.
In facilitating eCommerce, many unseen back-office payment gateways ensure the eCommerce infrastructure runs smoothly globally. In a competitive space where a 99% gateway uptime is considered a failure, several overlooked metrics are used to differentiate across the vast market and determine the strength of payment gateways. These include API accessibility, automated onboarding, iOS and Android support, supported payment methods, and reporting capabilities, and are just some of the criteria that can be evaluated to parse out an increasingly fragmented market.
Using TSG’s newest Payment Gateway Directory, sponsored by MCAG, a variety of key insights and trends can be uncovered when looking at the unique data points of 110+ leading global payment gateways. Read on for gateway insights that will continue to be prevalent in 2023.
- Geographic Focus – 43% of gateways represented within the directory are considered to have global reach or have stated functionality and client base on at least two continents. Looking at individual regions, North America was the most prevalent geographic service area of focus, followed by Europe, the Caribbean, Latin America, and APAC.
- Verticals of Focus – To little surprise, retail was once again the most common explicit industry of focus across represented gateways registering as a specific focus for 58% of listings vs. 54% in 2021. Other notable areas of vertical focus included B2B (34%), Healthcare (33%), Utilities (27%), and Insurance (27%).
- Emerging Payment Method Support – Just under 20% of gateways indicated native support to facilitate BNPL transactions, and support of merchant cryptocurrency transactions increased from 9% in 2021 to 13% in 2022.
- Setup Fees and Monthly Costs – 27% of gateways are measured to have evidence of charging gateway setup fees in at least some cases, and 55% of gateways charged a monthly fee. This is a slight decrease from 2021 with respect to one-time setup fees, but a slight increase in regard to monthly gateway fees, where 29% and 51% of gateways were measured to charge one-time setup fees and monthly gateway fees, respectively.
- Reporting – Virtually all Payment gateways (98%) maintained some sort of online reporting/dashboard functionality. However, only 92% of total represented gateways included reporting API that can allow merchants and integrators to query reporting data on demand.
- Corporate Structure – Nearly 70% of gateways represented in the Directory were determined to be owned privately, increasing slightly from 68% in 2021. While this isn’t indicative of where total gross gateway volume lies, it indicates substantial room for acquisition, partnership, and investment opportunities in the payment gateway space globally.
- API Accessibility – Similar to last year, 66% of gateway listings stated that their APIs and developer centers were fully public compared to 15%, where the APIs and developer centers were inaccessible. The remaining 18% of gateways listed were considered to have Quasi-Public or gateways with developer centers and APIs that are accessible but require additional approval (granting of sandbox account or completion of API access forms) to access.