Since the financial crisis and with the onset of the global pandemic, the FCA has progressively brought in stricter, more complex governance …
As we have all seen, there is somewhat of a revolution happening in the payments market globally. In 2020, the payments gateway market was valued at $17.2 billion and expected to reach $42.9 billion by 2026 with a CAGR of 16.43%.
Compared to other markets, payment methods have evolved at lightning speed since the end of the financial crisis. Several new ways to pay, process and transfer money are being offered owing to changes by the various financial conduct authorities.
Integration of the payment gateway has arguably become one the most important aspects of any business regardless of industry, with the increase in online transactions expected to drive market growth even further.
With the advent of IoT (internet of things) and artificial intelligence, these technologies have allowed an expansion of technology to perform specific tasks and workflows allowing for the automation of the whole transaction process, whilst providing merchants with better insight, feedback, and customer trends.
Along with this, there has been a development within the subset markets such as gateway and facilitators focusing specifically on the B2B market, allowing merchants to aggregate and utilise new solutions such as open banking and API technology. This tech expansion does come with its own complexities, especially around compliance and anti-fraud.
From what I have seen, the B2B market is still very much underserved mainly because the B2C space is higher volume and more profitable. It’s arguable, there is a “square peg, round hole” scenario happening from a large proportion of tech providers in this space whose B2C offering is having to be utilised by B2B players.
Furthermore, with the advent of PCI DSS3.2.1 which was recently launched to reduce credit card fraud and increase control over online payment security providers in the B2B space are finding compliance is becoming more complex. There are greater checks now required against merchant agents to verify their identity and make sure they are who they say they are.
Additionally, COVID-19 has undoubtedly driven the global growth of e-commerce sales which has in turn seen an increase in VC investment into the Fintech and WealthTech space, especially in the payment provider’s market.
Open Banking, in my opinion, is going to be one of the biggest changes in the marketplace and is a threat to the likes of VISA and MasterCard and how they make their money from payment providers. Open Banking will effectively cut them out of the payment process, allowing consumers to connect to their suppliers and pay direct, reducing fees, increasing security, and reducing fraud as it’s all handled through API connectivity bank to bank.
The payments industry continues to expand and evolve with transaction volumes and digital payments increasing across the globe. This space is becoming very competitive for open and closed payment platforms and investment rounds are becoming larger and larger which shows how with the right backing and the right tech this market is going to go from strength to strength.
“Asset managers are harnessing the tools, expertise, and infrastructure needed to turn data into actionable insights that can drive growth in investments …
It’s safe to say that Neobanks are winning the “Hearts and Minds” campaign with their users having the deep-seated roots of wanting to challenge and move away from traditional banks.
Digital Banks, Neobanks and “digital disruptors” have already started cutting into the revenues of the traditional and financial markets and institutions.
Read Nick Foggin’s complete deep-dive into Neobanking here