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Friday, December 9, 2022

BNPL not quite universal in ecommerce

As more of America's shopping moves online, the user base of buy now, pay later (BNPL) schemes has grown exponentially. But here's an interesting insight from The Strawhecker Group's newest payment gateway directory: fewer than 20 percent of gateways can support BNPL transactions.

It's not as bad as it seems, however, since that majority of online transactions flow through just a handful of gateways, and those gateways do offer BNPL functionality, explained Alex Ferguson, market intelligence manager at TSG.

"One of the main difficulties some gateways are grappling with in offering BNPL functionality is primarily debt liability that they don't have an appetite to deal with," Ferguson said. "These gateways also simply have other priorities that are more applicable to their verticalized client base that take precedence with the finite resources and time they have available." Think in terms of omnichannel, automated onboarding, contactless and other new payment functionality.

Highlights from TSG gateway directory

A gateway is the software that facilitates the transfer of data between online stores, as well as bricks-and-clicks merchants, and payment processors. TSG regularly reports on gateway trends. The Payment Gateway Directory offers a look at over 110 payment gateway providers, from large legacy players to small startups.

TSG recently published key trends revealed in the directory, providing a glimpse at how gateways are positioning for 2023. Here are additional insights and trends revealed by the TSG directory.

  • 43 percent of gateways in the directory have a global reach, or clients on at least two continents. North America is the most prevalent geographic service area.
  • Retail is the most common industry of focus, with 58 percent of listings, up from 54 percent in 2021.
  • Just over one in four gateways (27 percent) charge setup fees, at least in some cases, and 55 percent charge monthly fees.
  • Virtually all (98 percent) offer some type of online reporting/dashboard functionality. However, fewer (92 percent) have APIs that allow merchants and integrators to query reporting data on demand.
  • About two thirds of gateways listed (66 percent) have APIs and developer centers that are fully public; 18 percent were considered to be quasi-public. For the remainder, APIs and developer centers are inaccessible.
  • A majority (70 percent) of gateways are privately owned. "While this isn't indicative of where total gross gateway volume lies, it indicates substantial room for acquisition, partnership, and investment opportunities in the payment gateway space globally," TSG stated.
end of article

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