The global payment as a service (PaaS) market size was valued at $6.2 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 16.9% from 2020 to 2027.
Payment as a Service uses the SaaS model to streamline the payment for the customer. Digital payments are, as we know, increasing day by day. Thus, payment service providers are enabling transactions through e-wallet, websites, and other applications.
The payment industry has undergone a drastic change, and traditional payment methods have been replaced by newer methods where the payment is just a click away.
PaaS is not just altering the merchant landscape. Banks are identifying that the increase in PaaS adoption is an opportunity to provide a trustworthy option for their customers.
The increase in the transition from an on-premise model to a cloud-based service model is another factor contributing to market growth. Payment providers are increasingly transforming their traditional physical servers and on-premise model to cloud-based deployment to reduce operating costs and provide products at a faster rate.
The shift in the cloud deployment model has increased the development of alternate omnichannel solutions and digital wallets.
The platform segment held the largest market share of more than 83.0% in 2019. The platform segment includes merchant financing, regulatory compliance, security and fraud detection, payment applications, and gateways.
The professional services segment held the largest market share of over 67.0% in 2019. Professional services include consulting, training, maintenance, integration, and deployment. The rising demand for API based services along with transformation of traditional checks to digital payment is anticipated to fuel the growth of the segment from 2020 to 2027.
The managed services segment is expected to witness the highest CAGR of 7.9% from 2020 to 2027. Companies are actively looking to serve through managed services, simultaneously focusing on their core businesses. Such services help in reducing the operational costs as well as the infrastructure complexity, thereby providing a secure infrastructure.
North America held the largest share of more than 29.0% in 2019, owing to the highest adoption of the payment as a service model over traditional models in the region.
Asia Pacific is expected to emerge as the fastest-growing market over the next seven years. The growing retail sector in China, India, and Japan, and the presence of the majority of small and medium scale retail enterprises in the region is anticipated to boost the growth of the market in region. The predominant use of payment apps such as Alipay and WeChat Pay is expected to drive the market over the forecast period.
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