Vertical Payments Industry
The vertical payment industry is a part of the real-time payment market which enjoyed great growth as many opportunities for growth exist, especially in the areas of security and contact-less payments.
- Vertically focused applications, including payment applications, enhance the customer experience and are more efficient for businesses.
- The last decade has seen drastic growth and evolution, with new providers, platforms and tools launched every year.
- Vertical companies that offer services that are targeted specifically to customer needs will flourish, compared to companies that have more generic offerings and experience less turnover.
- Value-added models that monetize data-driven campaign engines, such as vertical offerings for industries are becoming more popular for the benefits they offer all parties involved.
- Real-time payments present businesses with an opportunity to gain and retain business by offering a secure, efficient commerce experience.
- Combining business application with the ability to process payments creates a more efficient, integrated process that lets the merchant serve their customer more effectively.
- Vertical SaaS companies overall have enjoyed a tripled market size over the last decade and have a $1.3 billion higher enterprise value.
- In 2019, vertical SaaS providers will succeed as they will be able to address customer's needs within their niche.
GLOBAL REAL-TIME PAYMENT MARKET
- In 2017 the global real-time payments market was $6.24 billion.
- The e-commerce and retail sector led the market in 2017.
- Digital payments, compared to a card in hand payments experienced a 23% growth in 2017.
GLOBAL REAL-TIME PAYMENT MARKET FORECAST
- The market will experience steady growth at a CAGR of %14.5 from 2018-2026.
- The market is expected to grow from $6.8 billion in 2018 to $25.9 billion by 2023 at a CAGR of 30.6%.
- Vertically focused solutions are positioned to gain a share of the merchant processing market.
- The competition for this market is moderate, with innovative companies prospering.
- By 2023, the US e-commerce market is expected to exceed $1 trillion, which is nearly 20% of the total US retail.
- The retail vertical will dominate the payment security market.
OPPORTUNITIES FOR GROWTH
- Retail and e-commerce will continue to be the largest market.
- The next five years will see mobile payment processing emerge as a prominent part of the industry.
- Off the shelf vendor solutions are gaining in popularity because of their lower operating costs as compared to in-house developed technology.
- With the growth of e-commerce and fraud, there is an opportunity for companies that can address fraud mitigation and management.
- Hardware-level security is not used by many mobile wallets and banking applications, showing an opportunity for growth in this area.
- Contact-less payments are becoming a preferred way to pay as they are hassle-free.
- 41% of US citizens say their smartphone or tablet is their "most important shopping tool," making this a key area for growth.
- The high percentage of smartphone users, cloud-based solutions, customer demand for immediate payment solutions, and merchant need for quicker settlements all offer growth opportunity.
- The internet growth rate has and will play a key role in the growth of the digital payment industry.
We began our research by getting an understanding of the vertical payment industry. As we were doing this, we noticed that there were few mentions of the vertical payment industry specifically, but a side note when talking about the real-time payment markets.
In an attempt to get more specific information, we searched for industry studies and found many studies that addressed the payment industry as a whole, but only one that covered vertical payments. We consulted Market & Markets, Market Research, ACI Worldwide, and Research & Markets to obtain market research. Therefore, we found an accessible report on the global real-time payment industry with market forecasts.
In addition, we found a report from Market and Markets that addressed the vertical payments' market. Unfortunately, it was a paid study, and we could not access it. Also, we found a free study that specifically addressed the vertical market, but it did not cover the market size or forecast.
In an effort to get concrete statistics, we went to Statista and searched for the market specific to the US. We were only able to locate a global market for real-time payments and various statistics for credit card processing that did cover the US. They are attached as google docs (here and here) as they might be beneficial.
We searched through PR Newswire, Modor Intelligence, Bloomberg, and Business Insider, and Trust Radius for relevant news or reports. Again, we were able to find information about the benefits of using vertical payments, but not specific market amounts. Through this research, we were able to locate many areas for growth and included those. We also found information pertaining to the vertical application industry as a whole and gleaned some information that was useful. We did not find any accessible information on vertical payments, but again found information for the real-time payment industry.
Next, we consulted Financial Times in search of any research that might be published in articles and found one article that mentioned vertical payments, but it was a premium article and we could not access it.
We believe that this market is relatively new and gaining in popularity, thus the lack of concrete information. The paid information located would provide a deeper look into the market. By expanding our scope to include the real-time payment industry on a global scale, we were able to answer the question.
Also, we included opportunities for growth in the market, as we were able to locate those in the market research and studies we were able to access.