United States Payment Gateways Market

United States Payment Gateways Market Size:

The United States payment gateways market size reached US$ 5,586.5 Million in 2023. Looking forward, IMARC Group expects the market to reach US$ 8,453.0 Million by 2032, exhibiting a growth rate (CAGR) of 4.6% during 2024-2032. The market is experiencing significant growth due to the rapid development of digital payments, the growing inclination of consumers toward online shopping and e-commerce, and the increase of small and medium-sized firms (SMEs) driving innovation across the region.

United States Payment Gateways Market Analysis:

• Major Market Drivers: The trend toward online buying and mobile transactions is the main force behind the growing acceptance of e-commerce and digital payments. Moreover, customer expectations for seamless checkout processes and regulatory compliance are driving the increased demand for safe and effective payment processing solutions.
• Key Market Trends: The integration of AI and machine learning (ML) for fraud detection and risk management within payment gateways, the growth of contactless payments and mobile wallets, influencing gateway functionalities to support diverse payment methods. The expansion of subscription-based payment models is catering to recurring billing needs across various industries.
• Competitive Landscape: The established players in the United States payment gateways industry such, PayPal, Stripe, Dwolla, and Beacon Payments LLC, are making investments in research and development (R&D) to innovate and increase demand for contactless and mobile payments. Specialized payment solutions-focused companies and niche businesses are becoming more prevalent, which promotes innovation and market variety.
• Challenges and Opportunities: Continuous changes in regulations pose a challenge for payment gateways to remain compliant. On the other hand, the continued growth of e-commerce presents a significant opportunity for payment gateways. As more consumers shop online, the demand for secure and efficient payment processing solutions increases.

United States Payment Gateways Market Trends:

Digital Payment Adoption

The United States payment gateways growth is significantly impacted by the shift from cash to digital payments, which is defined by a decline in the usage of cash and an increase in the acceptance of credit cards, debit cards, and ACH payments. The Federal Reserve survey results indicate that the use of digital wallets by American consumers, particularly those offered by fintech or non-bank technology companies, increased by 32% in 2023 compared to the previous year. This growth exceeded the 5% increase in the use of debit cards and the 8% increase in bank mobile applications. Currently, 40% of consumers prefer to utilize their bank's mobile app to make payments. Furthermore, younger generations are more likely to utilize digital wallets; many millennials (those age between 26 and 41) and Generation Z (those age between 18 and 25) use these platforms to pay bills with their smartphones. Furthermore, 80% of these younger clients believe that having the ability to pay with a mobile device is essential. Hence, this trend is driving development and innovation in the payment gateways industry as providers work to develop robust, flexible, and reliable solutions that satisfy the shifting needs of businesses and consumers in the area's digital economy.

E-commerce Growth

Payment gateways are developing technologically and can integrate with a wide range of e-commerce platforms to provide cutting-edge features like mobile payment options and real-time analytics. Furthermore, the need for payment gateways is growing due to the United States (U.S.) e-commerce industry's explosive growth. According to the Census Bureau of the Department of Commerce report, the U.S. retail e-commerce sales during the first quarter of 2024 were $289.2 Billion after accounting for pricing and seasonal variations. This is a 2.1% increase over the 2023 fourth quarter. E-commerce sales surged by 8.6% in Q1 2024 compared to the same period in 2023, while overall retail sales increased by 1.5%. In the first quarter of 2024, 15.9% of all retail sales came from online. As more consumers and businesses shift toward online shopping, payment gateways are experiencing increased transaction volumes, necessitating robust infrastructure to handle secure and efficient payments.Top of Form

Growing Small and Medium Enterprises (SMEs)

According to the Small Business Administration (SBA), the number of small and medium enterprises (SMEs) in the United States is increasing rapidly. These businesses account for 32.6% of all identified firms' exports, with small firms' exports totaling $413.3 Billion. This represents a substantial growth opportunity for the payment gateways market. Businesses in the US shipped $1.3 Trillion worth of goods in 2020. 264,366 of these exporters, or 97.3%, were small enterprises. Digital payment solutions employed by these SMEs at an increasing rate, which is essential for enabling online transactions and growing their digital footprint. Hence, several companies can now process payments more quickly and securely due to the integration of payment gateways, meeting the increasing demand from customers for digital transactions and online shopping across the region.

United States Payment Gateways Market Segmentation:

IMARC Group provides an analysis of the key trends in each segment of the market, along with forecasts at the regional and country levels for 2024-2032. Our report has categorized the market based on application and mode of interaction.

Breakup by Application:

• Large Enterprises
• Micro and Small Enterprises
• Mid-Size Enterprises
   

The report has provided a detailed breakup and analysis of the market based on the application. This includes large enterprises, micro and small enterprises, and mid-size enterprises.

In the US payment gateways market, large businesses typically need solutions that are reliable, scalable, and capable of safely and effectively managing large volumes of transactions. Additionally, businesses frequently seek features including advanced fraud detection, multi-currency compatibility, and integration capabilities with enterprise resource planning (ERP) systems. They look for trustworthy payment gateways that provide configurable reporting and analytics to efficiently handle intricate payment processes. For instance, in January 2024, in San Francisco, Stripe, a business-focused financial infrastructure platform teamed with the company Best Buy's newest platform, Wellness.BestBuyHealth.com to simplify the online experience for their users.

Micro and small businesses are transformed by their stipulation for prudently priced, robust payment processing solutions. These companies place a high value on simple pricing structures, inexpensive transaction costs, and seamless interaction through their current point-of-sale (POS) or e-commerce platforms. Furthermore, micro and small businesses require user-friendly interfaces and fast setup choices so they can quickly begin accepting online payments and be cost-efficient.

Mid-size firms are bridging the gap between bigger and smaller organizations' demands. These businesses naturally need solutions that are scalable and can expand to meet their changing demands. These solutions include features comprising mobile payment choices, recurring invoicing, and support for several payment methods. Besides, mid-size businesses place a high value on payment processing flexibility to accommodate numerous clients demands and operational agility. They frequently look for payment gateways that guarantee the security of sensitive consumer data by presenting convincing security measures and industry compliance.

Breakup by Mode of Interaction:

• Hosted Payment Gateways
• Pro/Self-Hosted Payment Gateways
• API/Non-Hosted Payment Gateways
• Local Bank Integrates
• Direct Payment Gateways
• Platform-Based Payment Gateways
   

A detailed breakup and analysis of the market based on the mode of interaction have also been provided in the report. This includes hosted payment gateways, pro/self-hosted payment gateways, API/non-hosted payment gateways, local bank integrates, direct payment gateways, and platform-based payment gateways.

Hosted payment gateways are a popular choice for small to medium-sized businesses due to their simplicity and security. These gateways redirect customers to an external page to complete their transactions, which means that merchants do not have to handle sensitive payment information directly. This significantly reduces the merchant's compliance requirements with standards such as PCI DSS. Additionally, examples of hosted payment gateways include PayPal and Stripe Checkout. They are particularly favored by businesses that lack the resources to manage complex payment security requirements but still want to offer a robust online payment solution.

Pro or self-hosted payment gateways offer businesses the ability to manage their payment interfaces directly while maintaining control over the entire checkout process. Additionally, merchants using these gateways handle the transaction process through their servers, which offers greater flexibility in customizing the payment experience. Besides this, pro/self-hosted solutions are typically used by larger businesses or those with specific needs to be met by hosted solutions. Some of the examples include setting up secure payment forms directly on the merchant’s website.

API or non-hosted payment gateways provide the highest level of integration and customization. They allow merchants to integrate payment processing capabilities directly into their websites or mobile apps via APIs. This setup keeps the customer on the merchant’s platform throughout the transaction process, potentially leading to higher conversion rates due to a seamless user experience. Stripe and Braintree are prominent examples of non-hosted payment gateways. These are best suited for businesses with strong technical capabilities and specific requirements for payment processing workflows.

Local bank integrates specialized payment gateways that connect directly with local banking institutions. These gateways facilitate transactions using customers' bank details and often provide features like direct debits or bank transfers. They are particularly advantageous for businesses that deal predominantly with local customers and want to offer more traditional forms of payment. This type of gateway is essential for catering to consumer preferences that lean towards trusted local payment methods rather than credit or debit card transactions.

Direct payment gateways process payments without redirecting customers away from the merchant’s checkout page, thus providing a faster and more seamless transaction experience. This type of gateway is integrated directly within the merchant’s website, which allows for complete control over the user experience but requires strict adherence to security protocols to protect customer data. For instance, Google Pay and Apple Pay are direct payment gateways that facilitate quick and secure payments directly within the merchant’s platform.

Platform-based payment gateways are integrated within popular e-commerce platforms like Shopify or Magento, offering a streamlined approach to handling payments. These gateways are pre-configured to work seamlessly within the platform, reducing the complexity of setting up a separate payment process. This is particularly beneficial for small businesses or startups that operate on these platforms and want an all-in-one solution for website management and payment processing. Shopify Payments and WooCommerce Payments exemplify this type, providing straightforward, platform-optimized payment solutions. For instance, on 7 March 2024, PayPal Holdings, Inc. announced that Tap to Pay on iPhone is now accessible to all Venmo business profile and PayPal Zettle users in the U.S. This feature allows them to accept contactless cards and digital wallet payments directly on their iPhones at no extra cost or need for additional hardware. This initiative represents PayPal's latest step in supporting small businesses to increase sales, expand operations, and enhance financial management efficiency.

Breakup by Region:

• Northeast
• Midwest
• South
• West
   

The report has also provided a comprehensive analysis of all the major markets in the region, which include the Northeast, Midwest, South, and West.

The Northeast region, encompassing major financial hubs such as New York and Boston, is a leader in fintech innovations and the adoption of advanced payment solutions. The presence of large financial institutions and tech startups drives demand for secure and efficient payment gateways. Consumers and businesses in this region are quick to adopt new technologies, making it a testbed for innovative payment models like mobile payments and contactless transactions. The region's dense population and high per capita income contribute to a robust e-commerce sector, requiring diverse payment gateway services that offer reliability and fast transaction speeds. For instance, in May 2024, Dwolla, a prominent provider of account-to-account (A2A) payment solutions based in the U.S., unveiled a strategic partnership with Visa, a global leader in digital payments. This collaboration aims to integrate advanced account verification features into Dwolla's A2A solution, enhancing its capability to offer a unified platform for medium to large businesses to manage payments through bank accounts. Leveraging Visa’s latest open banking solutions alongside Dwolla’s A2A payment technology, clients can now instantly verify account ownership and access real-time balance checks.

The Midwest is characterized by a mix of urban and rural settings, with industries ranging from manufacturing to agriculture influencing payment gateway needs. Cities like Chicago serve as commercial hubs where both B2B and B2C transactions require robust, scalable payment solutions. The region's payment gateways market is geared towards flexibility to serve a diverse client base, including smaller businesses and larger corporations. Additionally, the growing e-commerce trend among rural populations has increased the demand for payment gateways that offer easy integration and user-friendly interfaces for businesses not traditionally tech-savvy.

The South has a dynamic and growing economy with a significant increase in tech companies, particularly in areas like Atlanta and Miami. The region's diverse economy, including tourism, manufacturing, and services, necessitates versatile payment gateway solutions that can cater to both high-volume tourist transactions and regular commercial activities. The South's market is also seeing a rise in mobile and online payment adoption among consumers, particularly in urban areas, prompting payment gateways to enhance mobile compatibility and security features to tap into this growing segment.

The West, particularly California, is at the forefront of technology, making it a prime market for cutting-edge payment solutions, including blockchain-based gateways and AI-enhanced security systems. The tech-savvy consumer base here demands fast, reliable, and secure payment processing, encouraging payment gateway providers to innovate continually. Furthermore, the presence of major e-commerce giants and technology firms in Silicon Valley drives the need for high-performance payment gateways capable of handling large volumes of transactions efficiently and securely.

Competitive Landscape:

• The market research report has also provided a comprehensive analysis of the competitive landscape in the market. Detailed profiles of all major companies have been provided. 
• At present, key players in the United States payment gateways market are actively employing strategies to strengthen market growth by enhancing security measures, expanding mobile compatibility, and integrating advanced technologies like artificial intelligence (AI) and blockchain. They focus on improving the user experience through seamless integration and minimal transaction times, critical for retaining customer loyalty in a competitive market. Partnerships with major e-commerce platforms and financial institutions also play a crucial role, widening their service reach and accessibility. These companies invest heavily in research and development (R&D) to innovate and adapt to changing consumer preferences, such as the increasing demand for contactless and mobile payments, ensuring they remain at the forefront of the payment processing industry. For instance, on 17 April 2024, PayPal Ventures took the lead in an extension financing round for Pliant, contributing over €18 Million. Pliant, a B2B credit card platform enabling businesses to streamline payment processes, plans to utilize the funds to expand into other markets. The financing round also saw participation from existing investors SBI Investment, Motive Ventures, and Alstin Capital, bringing Pliant's total Series A funding to over €50 Million.

United States Payment Gateways Market News:

• April 2024: Dwolla has launched its new Open Banking Services, aimed at optimizing Account-to-Account (A2A) payments. Through pre-integration with leading open banking service providers, Dwolla offers businesses a straightforward implementation process, reducing complexity and accelerating the rollout of A2A payment solutions using Dwolla's unified API.
• April 2024: San Francisco, Stripe, a financial infrastructure platform serving businesses, has revealed a collaboration with URBN to handle online and in-store retail transactions for Urban Outfitters, Anthropologie Group, Free People, and FP Movement. Additionally, URBN aims to enhance customer checkout consistency, improve authorization rates, and pave the way for future innovations by adopting Stripe as its core payment infrastructure.

United States Payment Gateways Market Report Scope:

Key Questions Answered in This Report:

• How has the United States payment gateways market performed so far, and how will it perform in the coming years?
• What has been the impact of COVID-19 on the United States payment gateways market?
• What is the breakup of the United States payment gateways market on the basis of application?
• What is the breakup of the United States payment gateways market on the basis of mode of interaction?
• What are the various stages in the value chain of the United States payment gateways market?
• What are the key driving factors and challenges in the United States payment gateways market?
• What is the structure of the United States payment gateways market, and who are the key players?
• What is the degree of competition in the United States payment gateways market?

Key Benefits for Stakeholders:

• IMARC’s industry report offers a comprehensive quantitative analysis of various market segments, historical and current market trends, market forecasts, and dynamics of the United States payment gateways market from 2018-2032.
• The research report provides the latest information on the market drivers, challenges, and opportunities in the United States payment gateways market.
• Porter's five forces analysis assists stakeholders in assessing the impact of new entrants, competitive rivalry, supplier power, buyer power, and the threat of substitution. It helps stakeholders to analyze the level of competition within the United States payment gateways industry and its attractiveness.
• The competitive landscape allows stakeholders to understand their competitive environment and provides an insight into the current positions of key players in the market.