We do almost everything online these days, so it’s no surprise that many of our payments are done the same way. However, the extent of this is quite shocking – the global payment processing industry is expected to reach $139.90 billion by 2030. That’s a compound growth rate of 14.5% in just seven years.
Of course, rapidly advancing technology is at the heart of this, along with regularly changing consumer preferences. As a business owner, staying ahead of the curve is vital for creating growth strategies and achieving success, and that’s what we’ll discuss in this guide. You’ll learn some intriguing payment processing industry statistics and tools to overcome common challenges.
TL;DR
- Over 70% of global consumers now use digital payment methods, shifting away from cash.
- Major tech companies like Apple, Google, and Amazon are challenging traditional payment processors by rapidly gaining market share.
- Over 98% of financial institutions report rising compliance costs due to complex global regulations like PSD2 and AML directives.
- Real-time payments are expected to grow, fueled by consumer demand for instant transactions.
- Emerging markets are seeing a surge in mobile wallet adoption, with Sub-Saharan Africa leading.
- Payment fraud losses surpassed $40 billion globally, with phishing and identity theft being the top threats.
- Industries like healthcare, travel, and gaming are adopting tailored payment solutions to enhance customer experience and streamline operations.
The Evolving Payment Landscape
Over the last few years, the payment processing industry has changed beyond measure, and new developments look set to continue into the future. Of course, this isn’t only driven by technology, but also regulatory changes and how customers prefer to pay for their goods and services. All of this means that it’s more important than ever before to understand the different payment gateways available to your business, especially in the high-risk category.
In this section, let’s dig deeper where the future may take us.
Market Size and Growth Projections
Our opening statistic makes it very clear that payment processing industry growth is rapid and booming. According to a 2024 report, 75% of worldwide adults use some form of digital payment method, with a sharp move away from traditional cash payments.
The same report highlighted that North America is the leading region in the market, but the Asia-Pacific region isn’t far behind with a 25% increase in digital payments in 2024. You might wonder why this region is advancing so rapidly, and that’s down to the smartphone and ecommerce sector it controls so much of.
Keeping an eye on regional shifts can help you develop a strong business plan to move toward any advantageous elements.
Segment-wise Growth
In terms of payment methods, credit cards are still the forefront currently, with more than 30% market share in 2021. Studies show that the general-purpose credit card segment controlled more than 80% of global credit card payments in 2022, with Visa the leading network with 39% of purchase transactions.
Despite this, digital wallets are quickly gaining traction and look set to continue their popularity in the coming year. The table below gives some fascinating insights into different payment methods and their prevalence now and in the future.
Payment Method | Market Share (2021) | Projected Growth (2022-2030) |
Credit Cards | >30% | Steady |
Digital Wallets | ~20% | High |
Debit Cards | ~25% | Moderate |
Others | ~25% | Varies |
Technological Disruptions
We’ve already mentioned that technology has a lot to do with rapidly growing payment processing industry trends, including AI and blockchain. However, with any type of payment technology, it’s vital to be aware of different types of credit card fraud.
Let’s explore these technologies in more detail.
Blockchain and Cryptocurrencies
Cryptocurrencies form part of payment processing industry growth.
Source: Pexels
The most notable type of technology to mention is certainly blockchain. Not only does blockchain have the power to reduce fraud across the financial services industry but it can also boost transaction speeds. All of this explains why it is being rapidly adopted within the payment processing industry. In fact, blockchain within the banking, financial services, and insurance market is expected to reach $22.46 billion by 2026, with a compound growth rate of 73.8%.
Artificial Intelligence and Machine Learning
You’ve no doubt heard about artificial intelligence (AI) for several years now, but these days it’s become a major reality, along with machine learning (ML).
These are two technologies that have a huge amount of use within the payment landscape, especially in terms of fraud detection, risk assessment strategies, and personalizing each customer’s overall experience. In fact, studies have shown that AI has the potential to reduce fraud by up to 30%.
The Competitive Landscape
A growing payment processing industry means high competition, and it’s unsurprising that there are many established platforms and startups competing for a share of the market.
Choosing the best high-risk merchant service provider is a critical decision and one that requires a general overview of the entire industry. At PayCompass, we stand out due to our dedicated high-risk merchant accounts that come with built-in chargeback prevention and real-time transaction monitoring capabilities. For that reason, we’re a premium choice for high-risk businesses across a range of industries.
Market Consolidation
It’s unsurprising that within a growing industry, there have been many mergers and acquisitions taking place. In fact, there were 102 deals across the industry in 2019 alone. These trends show a move toward consolidation and impacts on the options available for business owners.
Strategic Partnerships
We’ve seen several strategic partnerships over the last few years – one of the most notable being the 2016 partnership between Visa and PayPal. Such unions are designed to expand market reach but also boost service offerings for businesses alike. However, there are implications to consider which could, in some cases, reduce services available to high-risk businesses in particular.
Emerging Players and Niche Segments
The big industry players are still there but coming in behind them are some emerging entrants, including many niche options. It’s important to assess all options carefully to find the best fit for you.
The video below provides some key insights into niche segments and trends within the payment processing industry.
High-Risk Merchant Services
The high-risk merchant services niche is growing year upon year, tailored to the specific challenges that high-risk businesses face. In many cases, high-risk merchants struggle to secure quality payment processing services, often facing blocks or restrictions. Of course, this leads toward looking for a PayPal alternative or similar.
PayCompass’ merchant accounts fit into this niche perfectly, providing the resources you need to continue your business operations without issues. We also offer advice on dispute management, to help you avoid lost revenue.
Regulatory Environment and Compliance Challenges
As with anything financial, there are many regulations in the payment processing industry. Understanding these allows you to navigate the complex landscape with greater ease, reducing the chance of potential penalties.
Data Protection and Privacy Regulations
The need to follow data protection regulations has led to new payment processing industry trends.
Source: Pexels
Data protection should certainly be on every business owner’s radar, and there are several regulations to bear in mind. Two of the most prominent are GDPR, which is an EU regulation, and CCPA, originating in California. Businesses operating in these areas, either based there or trading there, must understand these regulations well to ensure compliance.
The table below explains the different regulations, their key requirements, and the penalties for non-compliance.
Regulation | Region | Key Requirements | Penalties for Non-Compliance |
GDPR | EU | Data minimization, Consent | Up to €20 million or 4% of global turnover |
CCPA | California, USA | Consumer rights, Data disclosure | $2,500-$7,500 per violation |
PSD2 | EU | Strong customer authentication | Varies by country |
PIPEDA | Canada | Consent, Limited collection | Up to CAD 100,000 per violation |
Compliance Costs
Of course, it’s not just non-compliance that costs money, but compliance too. There are substantial costs involved in ensuring compliance, explained by the fact that in 2020, financial institutions invested a huge $180.9 billion in financial crime compliance.
Anti-Money Laundering (AML) and Know Your Customer (KYC) Requirements
Two other regulations that are vital for businesses to know about are Anti-Money Laundering (AML) and Know Your Customer (KYC). These are both critical regulations that are designed to prevent financial crimes and protect businesses and customers. To ensure regulation, businesses must align their payment processes accordingly.
Future Trends and Opportunities
There are many trends on the horizon that are extremely exciting and will no doubt create opportunities and challenges alike for businesses operating in both high-risk and low-risk spaces.
Contactless and Mobile Payments
The COVID-19 pandemic increased worldwide use of both contactless and mobile payments and the trend has continued since then. In fact, the worldwide contactless payment market is expected to hit around $4.68 trillion by 2027 alone. For this reason, it’s vital to assess and adjust your payment acceptance methods to meet this high customer demand.
Biometric Authentication
To add extra security to contactless and mobile payments, biometric authentication is widely used and has a very high success rate. Studies have shown that biometric payment systems can reduce fraud by up to 75% when compared to regular PIN-based options.
As biometric authentication becomes more commonplace, it’s important to assess how you can integrate fingerprints and facial recognition into your payment systems.
Cross-border Payments and Remittances
Most businesses now trade across borders, whether on a worldwide scale or across a particular region. This has led the global cross-border payment flow to boom, and it is projected to hit a value of $222.1 billion by the end of 2025. Of course, this shows the sheer scale of international trade these days and highlights the many opportunities available.
However, it does highlight the need for streamlined solutions, particularly when dealing with multiple currencies. This is another area where PayCompass can help you. We offer multi-currency accounts and dedicated online travel agency payment processing for large-scale businesses within the travel industry. We understand the huge potential of the global market and we want to help you maximize your success within it.
Emerging Markets and Financial Inclusion
The growing global payment landscape is also paving the way for new emerging markets to appear, which also brings a range of opportunities for businesses that want to engage with them. Let’s explore some of these markets in a little more detail.
Mobile Money Services
Some regions have limited traditional banking infrastructure available and in those cases, mobile money services are thriving. In fact, as of 2020, there were more than 1.2 billion registered mobile money accounts worldwide, and within that, $2 billion processed payments daily. This huge statistic shows the importance of focusing on money-first strategies across emerging markets. In fact, with PayCompass, we take it a step further with our payment gateway processing over $3 billion in over 170 countries around the world.
Super Apps
Within Asia and Africa, many integrated platforms have emerged that combine multiple services, including payments. China has the WeChat Pay platform with around 1.318 billion users, proving that these super apps are playing a huge role in how customers initiate transactions from region to region.
Microfinance and Digital Lending
Another emerging and significant trend is microfinance and digital lending. These facilitate microloans and peer-to-peer lending in markets that are underserved by traditional financial services. With a compound annual growth rate of 16.7%, this industry looks set to reach a value of $20.31 billion by 2027 alone, creating lending options for small businesses and individuals who struggle to access traditional means.
Cybersecurity and Fraud Prevention
Fraud prevention techniques play a vital role within the wider payment ecosystem.
Source: Pexels
We’ve briefly touched upon fraud so far, but this is such a huge issue within the payment ecosystem that it deserves a deeper dive.
Advanced Fraud Detection Techniques
All payment processors take fraud protection very seriously, and most offer sophisticated fraud prevention tools. For instance, our high-risk merchant accounts offer a range of different fraud protection tools and advice. In fact, the fraud detection and prevention market worldwide is projected to hit $62.7 billion by 2028.
However, it’s vital to stay up-to-date with advanced security options and new regulations to ensure that your business remains secure. For instance, understanding effective chargeback prevention strategies for e-commerce goes a long way to protecting against nefarious practices.
Behavioral Biometrics
A key technology in the fight against fraud is behavioral biometrics. This is a new and emerging technology that looks at behavior patterns to spot any potential fraud. Compared to traditional biometric methods, such as fingerprints and facial recognition, this offers a less intrusive security method and doesn’t affect the customer’s experience.
Tokenization and Encryption
Two other technologies are making waves in the payment security world – tokenization and encryption. The tokenization market alone is expected to grow significantly, at a CAGR of 22.1%, hitting $4.13 billion in 2025.
Both of these technologies are becoming increasingly standard practice and help to secure sensitive payment data against theft and data beaches. It’s important for businesses to consider implementing these methods to boost data security and help with regulation compliance.
Alternative Payment Methods
The overall payment ecosystem has evolved over the years and these days there are many different payment types available. The more you can offer to your customers, the more satisfied they will be as they can choose what they prefer. However, it’s important to ensure that these align with your business needs and offer value for money.
Buy Now, Pay Later (BNPL)
The worldwide Buy Now Pay Later market, or BNPL, has grown year upon year and is expected to hit $3.98 trillion by 2030. Economic downturns and cost of living issues have led many customers to take this route rather than paying in full, and it creates a more flexible choice for many.
Installment Payments
One way to implement a BNPL option is to allow installment payments. These are becoming increasingly popular and gives customers more control over their spending and the ability to plan their finances more accurately. However, before going down this route, it’s important to consider whether this option fits into your business cash flow strategy.
Cryptocurrency Payments
Cryptocurrencies are known to be extremely volatile, but that doesn’t mean they’re not popular. In 2024, global crypto trading volume exceeded $108 trillion, and these payment types are being adopted from region to region. It’s important to weigh up the pros and cons in terms of accepting cryptocurrency payments, but many customers do prefer them. From a business standpoint, they can also bring added benefits, such as low fees and fast settlement times.
Learnings Recap
We’ve reached the end of our payment processing industry overview and it’s clear that the picture is complex and full of both opportunities and challenges for growing businesses. The payment processing industry has undergone many changes over the last few years and this picture looks set to continue into the future. With new technologies and changes in customer preferences, new innovations appear on the horizon, such as blockchain, AI, and biometrics.
With improvements in security and fraud detection also comes new alternative payment methods, such as buy now, play later, and cryptocurrencies. It’s important to think carefully about whether these fit your business model or not before investing in the infrastructure to accept them. However, they certainly bring many benefits under the right circumstances.
However, despite the number of positive advancements, there are still many challenges to deal with, particularly for high-risk businesses.
At PayCompass, we’re extremely aware of the special challenges that high-risk business owners face every single day. In many cases, these can be a real block to business success and growth, and it’s important to find solutions. That’s where our dedicated high-risk accounts come in useful. We’ve tailored our solutions to deal with your unique challenges, all the while constantly updating our offerings to include the latest innovations. We aim to help you deal with your payment processing needs while allowing you to grow your business day-by-day.
So, if you’re ready to start your PayCompass journey, reach out to us today.
