Market Share Technology Report (MSTR): Payment Processing Services 2020

January 28, 2020 Scott Wallask

Payment processing market share technology reportThis Market Share Technology Report (MSTR) from Datanyze examines market share and trends for payment processing software over the prior 12 months. Vendors can use this MSTR report to track technology market share among competitors and learn about the frequency of customer implementations, while software end users can read about the industry leaders and trends that influence popular features in payment processing services. 

Market Summary: Expect Few New Installations; PayPal slips slightly

Today’s consumers expect to purchase online items quickly and effortlessly, and in many cases, payment processing software makes those wishes come true.

The payment processing market appears to be mature: At last count, there were nearly 644,000 installations of these various platforms across all companies, and there are relatively few new implementations planned in early 2020, according to a ZoomInfo survey of business professionals about their purchasing decisions. 

Nonetheless, there is still significant interest from businesses about payment processing, as it is the top visited technology subcategory on the Datanyze website. Datanyze tracks unit market share, which is the number of units (i.e., tech installations) that vendors sell as a percentage of total sales in a market. ZoomInfo is the parent company of Datanyze.

Leaders in payment processing servicesFigure 1: A look at payment processing technology by unit market share. Source: Datanyze.

Does the lack of new projects mean finance and fulfillment professionals are happy with their payment processing services? Or is it the Amazon marketplace effect of forgoing an e-Commerce shop and instead using a marketplace store? The research doesn’t offer a definitive answer, although 66% of respondents at 2,076 companies surveyed by ZoomInfo since Q4 2018 said either:

  • Payment processing projects are not a priority now, or
  • They are not sure if such projects are a priority.

Payment processing software enables transactions between customers and vendors over e-Commerce platforms, making it an essential part of online retail stores. Users of the software can manage account information, payment types, and payment authorizations. 

Payment processing services market presenceWhat is the Market Presence of Payment Processing Vendors?

Although the Goliath of payment processing platforms -- PayPal -- may be getting a wee bit smaller by unit market share, there are not many Davids ready to challenge it. 

Looking at the number of business installations, PayPal lost 5% payment processing market share from January 2019 through November 2019, according to Datanyze research. The numbers reflect do not account for PayPal revenue or the number of consumers using PayPal’s services.

Want to check out all the vendors in payment processing? Visit Datanyze’s market share page about the technology.

By comparison, #2 payment processor Stripe held steady throughout 2019. It slightly increased its unit market share from 15% to 16% by November,  but it had about 300,000 less installations than PayPal, according to Datanyze’s numbers.

PayPal vs. Stripe installations 2019Figure 2: A comparison of PayPal and Stripe business installations during 2019. Source: Datanyze. 

PayPal and eBay move on without each other

Although Datanyze research does not point to what caused installations to drop, there are important factors that might be affecting PayPal:

  • PayPal and eBay will end their business relationship in 2020, as eBay transitions to its new back-end payment processor, Adyen. EBay stores have unique web addresses, and Google can index each of them, so eBay’s move away from PayPal could be showing up as decreased PayPal installations (customers still have the option to pay for eBay purchases with PayPal). Adyen -- a small player in the payment processing industry -- saw its installations increase from 305 to 525 from January 2019 to November 2019. It will be interesting to watch whether Adyen’s installation count blooms in the coming year.
  • It’s easy for online sellers to spurn a PayPal installation on an e-Commerce site and instead sell on Amazon and other large marketplaces.
  • Although a small factor, investors have described potential consumer spending uncertainty connected to the United Kingdom leaving the European Union as part of Brexit. This situation could hurt U.S. companies that derive significant revenue in the U.K., such as PayPal.

All of that said, PayPal is not being conservative in its own spending. It dropped $4 billion in November 2019 to acquire Honey, an online browser extension that automatically applies coupon codes as people search for products.

PayPal also owns Braintree, the #5 payment processing platform by unit market share (Braintree offers more options for website developers compared to PayPal’s other products). Meanwhile, Stripe owns Stripe Checkout (#4), which offers a quicker setup than the main Stripe product, but offers less options.Payment processing market share by installationsFigure 3: A look at payment processing market share by installations as of November 2019. Source: Datanyze.

An interesting note: LawPay (#10) is the only company on the list other than PayPal to hold a majority of unit market share in a particular industry. In LawPay’s case, it enjoyed a 52% share of installations in legal offices as of November 2019 (PayPal’s share was 35% in legal).

Other leaders on our payment processing companies list include Amazon Pay, Square Payments, Authorize.net, Vanco Payment Solutions, and Klarna.

Payment processing rising starWho is a Rising Star in Payment Processing Services?

Afterpay -- an Australian-based company that offers four-installation payment plans with no interest fees for consumers -- had a great 2019 as attention grew for its “buy now, pay later” approach.

Installations of Afterpay as tracked by Datanyze increased from 42 in January to 3,264 by November, a 77-times increase. Granted, those unit numbers are small compared to PayPal and Stripe, but the increase indicates momentum for Afterpay. Those numbers also may be skewed by Datanyze tracking more American installations than Australian installations, but regardless, the jump was sudden.

“Instead of making money on consumer fees, Afterpay charges the merchants for a cut of the transactions made via the platform,” according to PYMNTS.com. CEO Anthony Eisen explained that retailers pay that fee because Afterpay brings a lot of business to e-Commerce sites from loyal return customers and other consumers on the Afterpay platform seeking merchants that offer the service.

From the consumer end, Afterpay promotes its interest-free plans to millennials who are already paying interest on debt and want to avoid credit cards (the company does enforce late payment fees). From the business partner perspective, Afterpay works with 30,000 retailers globally, including many fashion stores that are popular with Gen Xers.

The company announced that in the eight weeks after the 2018 holiday shopping season, Afterpay’s U.S. customer base grew by approximately 40%.

“By June 2019, Afterpay hit 1.5 million customers in the U.S., and also revealed some huge new partnerships, with Levi’s, Ray-Ban, and Tarte Cosmetics key among them,” Reviewed reported.Afterpay installations 2019Figure 4: Afterpay saw a marked increase in installations of its platform in spring 2019. Source: Datanyze.

Payment processing buyer trendsWhat are Buyer Trends for Payment Processing Tools?

Perhaps what’s most noticeable among buyers of payment processing services is what they are not doing. 

As mentioned earlier, only a small percentage of companies (from 1% to 6%) surveyed by ZoomInfo indicated they would begin a payment processing implementation within the next six months. ZoomInfo surveyed various business professionals from Q4 2018 through Q3 2019 to collect the responses.

In Q3 2019, 68% of respondents said payment processing projects were not a priority or they weren’t sure of such a project’s status.

Payment processing software projects Figure 5: Most surveyed companies indicated payment processing implementations were not a priority in 2019. Source: ZoomInfo.

The amount of payment processing initiatives underway dropped rapidly in the span of one year, from 16% in Q4 2018 to 7% in Q3 2019. That percentage is low compared to other technologies, such as marketing automation, which saw up to 47% of companies surveyed in a given quarter during 2019 indicate they were in the midst of an implementation.Payment processing project timelinesFigure 6: Data shows that far more payment processing implementations were completed or in progress since late 2018 compared to planned future projects, indicating a slowdown in installations. Source: ZoomInfo.

Projects don’t differ much with B2B vs. B2C

The responses from a total of 2,076 finance professionals surveyed further broke down in this way:

  • 973 classified their companies as business to business (B2B).
  • 341 as business to consumer (B2C).
  • 430 as both B2B and B2C -- an office supply store that sells to businesses and consumers, for example.
  • 332 as neither B2B or B2C -- a government contractor, for example.

The patterns of project completion and future start dates did not vary significantly when broken down into B2B vs. B2C.

Also, there were no noticeable spikes in either increased or decreased spending on payment processing software during 2019, according to ZoomInfo survey results.

Are you a payment processing vendor interested in which companies are looking to take on projects? Learn more about intent data related to your industry now from our parent company, ZoomInfo.

One outside factor could affect the pace of future payment processing projects is peer-to-peer apps such as Zelle and Venmo (which is owned by PayPal). These apps allow consumers to pay some businesses, and the demand for this service is expected to grow, particularly through social-media-based purchases, according to Forbes.

“As more and more retailers -- including Shopify merchants -- add Venmo as a payment option at checkout, they ... offer the large millennial demographic a way to pay that's as easy as sending money to friends and family,” Forbes wrote in 2018.

Payment processing outlookWhat is the Outlook for Payment Processing Services?

PayPal was among the first companies to use technology to change the way merchants collected payments from consumers. Although the company dropped in unit market share in 2019, it remains far ahead of competitors.

In 2020, observers should get a clearer view into whether other vendors, such as Stripe, will be able to make any serious headway against PayPal’s dominance. 

As Afterpay illustrated, innovation can take an established technology in a new direction and create new companies to watch. Afterpay and others will no doubt let the spending habits of millennials and even younger Generation Z members guide future product development.

About our data collection

Datanyze collects technographics data by scanning more than 35 million web domains daily, using a combination of web crawling, third party providers, and natural language processing. Most technologies leave behind a footprint or “signature” that helps the crawler identify it from other elements of a website or mobile app. By finding and cataloging these signatures across millions of sites, Datanyze can determine how many companies use a given technology -- and take note of when certain technologies appear or disappear from a company’s site.

For technologies that leave no footprint (such as databases and CRMs), Datanyze uses natural language processing as an alternative method to identify tech deployment. This involves scanning and digesting unstructured data -- text from job postings, social media, press releases, and more -- to infer a relationship between a company and a particular technology. This method involves complex keyword targeting.

Also, ZoomInfo (the parent company of Datanyze) conducts quarterly surveys of a percentage of business professionals within its database, asking them detailed questions about technology purchases and upcoming projects.

 

About the Author

Scott Wallask

Scott Wallask is a director of content at ZoomInfo and Datanyze. He has more than 25 years of storytelling and editing experience, and previously oversaw a series of enterprise tech news sites. Before that, he spent 12 years covering hospital safety topics. He holds a BA degree in journalism from Northeastern University in Boston.

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