Adjustments in payment processing practices observed after economic tightening post-pandemic
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In the ever-evolving world of finance, the payment processing industry has seen significant changes in the post-pandemic era. A recent report provides valuable insights into these developments and the competitive landscape among major players.
For the first time, Adyen has overtaken Paysafe in terms of revenue, marking a notable shift in the industry. However, while overall growth is evident, most payment processors experienced lower growth rates in 2023 compared to the previous year.
Despite the economic challenges, the digital payments market is projected to expand rapidly, with a CAGR of 19.43% from 2025 to 2030. This growth is driven by the increasing adoption of digital and contactless payment modes, with digital transactions accounting for a significant share of total transactions for major players.
One key trend is the convergence of channels and unified payment orchestration. Merchants are increasingly adopting platforms that integrate in-store Point of Sale (POS), web, and in-app payments, aided by real-time authorization and AI-based risk engines. While POS still dominates, online and remote payment channels are growing at around 18.6% CAGR, disrupting traditional models.
Services, such as implementation, advisory, compliance, and developer-centric orchestration, are driving growth faster than hardware or solution sales. Companies like Fiserv and Stripe are leading this trend with service-led expansion and developer-friendly onboarding features.
Independent Software Vendors (ISVs) integrating payments are becoming crucial distribution channels, especially in verticals like retail and restaurants. This integration boosts margins and customer stickiness, though some merchants express concerns about inflexible, bundled payment setups.
Emerging markets, such as Africa, Asia-Pacific, and Latin America, are experiencing a surge in Alternative Payment Methods (APMs) like eWallets, Buy Now Pay Later (BNPL), real-time payments, and mobile money. These markets offer vast potential due to youthful populations and expanding middle classes, despite facing unique challenges due to fragmented ecosystems and rapid consumer shifts.
Strategic partnerships and API integrations remain key growth drivers, with 84% of fintech companies engaging in collaborations. These partnerships support payment processing, cross-border remittances, and transaction management, underscoring the demand for interoperable and scalable fintech infrastructure.
Post-pandemic growth emphasizes underserved customer segments, including MSMEs, low-income populations, women, and seniors, which now represent larger shares of fintech revenues. This aligns with broader trends toward inclusive digital finance powered by tailored payment services.
Regulatory complexity and compliance demands have heightened due to increased regulatory mandates, such as instant payments, ISO 20022 migration, and MiCA in Europe. This necessitates a focus on compliance advisory services and sophisticated payment orchestration capabilities.
Technology trends, such as AI-powered risk engines, data analytics, and finance automation, are shaping payment processing innovation and operational efficiency.
In summary, the post-pandemic payment processing landscape is characterized by fast digital adoption, channel integration, service-led growth, emerging market expansion, industry partnerships focused on APIs, and increased regulatory complexity, all driving industry evolution as reflected in Q4 2023 earnings discussions and market reports.
Every payment processor saw revenue growth in FY 2023, but most saw lower growth rates compared to 2022. Despite the ongoing economic challenges, there is a widespread expectation among payment processors that 2024 will be easier as macroeconomic conditions improve.
Square has surpassed Worldline and Worldpay in terms of revenue and is closing in on Global Payments. PayPal holds the highest FY 2023 revenue, nearly double that of Fiserv, the second-largest player. DLocal is closing the gap on both Adyen and Paysafe in terms of revenue, emerging as a strong competitor in the market.
Lucy Ingham, Editor-in-Chief and Head of Content at the platform, stated that the analysis of payment processors' earnings calls can reveal industry developments, key trends, and competitive positions. Macroeconomic discussions during earnings calls decreased significantly in Q4 of the year, with 2024 expected to be easier for payment processors. The platform will closely monitor how pronounced the improvement in 2024 will be, as suggested by payment processors' expectations.
[1] MarketsandMarkets (2021). Global Digital Payments Market Size, Share, Trends, and Growth Analysis Report by Component (Hardware, Software, and Services), by Solution (Payment Gateway, Payment Processing, and Payment Orchestration), by Application (Retail, Healthcare, BFSI, Travel and Tourism, and Others), by Region, and by Key Players - Forecast to 2025.
[2] Stripe (2023). State of the Union 2023.
[3] Payments Dive (2023). ISVs are becoming crucial distribution channels for payments.
[4] World Bank (2023). Digital Financial Services in Developing Countries.
[5] KPMG (2023). Fintech 2023: The new financial services normal.
The report's findings indicate that the digital payments market is poised for accelerated growth, with a CAGR of 19.43% from 2025 to 2030, driven by the increasing use of digital and contactless payment methods. Notably, business strategies in the industry, such as the provision of services like implementation, advisory, compliance, and developer-centric orchestration, are currently boosting growth faster than hardware or solution sales.
In the ongoing competition, technological advancements are shaping payment processing innovation and operational efficiency, with AI-powered risk engines, data analytics, and finance automation playing significant roles. This development underscores the crucial intersection of finance, business, and technology in the evolving digital payments landscape.
