The market for digital payment “gateways” such Apple Pay and Android Pay will grow by more than $81 billion by 2024, according to research and advisory firm Technavio.
A key factor in this expected growth was the adoption of cloud computing technologies by payment service providers, the firm’s research indicated.
Increased adoption of cloud computing would have “a positive impact on the market and contribute to its growth significantly over the forecast period”, as providers respond to growing demand from clients.
The firm cited Visa’s 2018 acquisition of German software provider Payworks with the intention of offering “cloud-based solutions for in-store payment processing”.
“Factors such as the emergence of mobile wallets and the advent of big data management will have a significant impact on the growth of the payment gateways market value during the forecast period,” Technavio added.
The market was estimated to be worth $347 billion this year and would expand to more than $416 billion by 2024, the firm reported.
This represented annual growth of 4.5% a year between 2019 and 2024, Technavio’s report said. However, this growth could be affected by consolidation of providers or if some vendors exit the market, the firm said.
North America was forecast to experience the highest level of incremental growth of any region in the next few years, the firm reported, with an expected increase in integration of payment gateways in the online retail sector.
The COVID-19 crisis was likely to provide opportunities for such services to expand as the use of contactless point-of-sale technology grows, Technavio added.
This reflects other recent research that has shown a fall in the use of cash and an increase in the use of mobile wallets and contactless payments as a result of the COVID-19 pandemic.
The Business Research Company reported last month that global card and payments market was expected to grow to $999.3 billion by 2023.
The report said the pandemic was having “a major impact” on the use of credit and debit cards, as several governments and the World Health Organization had urged people to use contactless payments instead of cash to avoid infections.
James Pomeroy, global economist at HSBC, said in a blog post last week that the decline of cash was “good news for the global economy” as it would remove “frictions” involved in cash-based system.
Pomeroy said the advanced adoption of mobile payments in mainland China had been credited with helping to limit the spread of COVID-19. In countries where this was less advanced, concerns about spreading the virus could “accelerate the move in the same direction”, he added.
“We expect central bank digital currencies to become an even bigger part of the discussion once this period of uncertainty is behind us,” Pomeroy stated.
“Cash is unlikely to disappear for good completely, but in a world where human contact is minimised, demand for the alternative is rising – and we may not look back.”