As eCommerce spending accelerates at an even greater rate due to the change in spending preferences brought on by the COVID-19 pandemic, the role of payment gateways is as crucial as ever. A high functioning and efficient payment gateway is the backbone of each transaction and gateways will be tested this holiday season as they facilitate an even higher amount of volume with the holiday shopping season fast approaching. In addition to consistent uptime, factors such as transaction speed, authorization failure rate, API accessibility, ease of onboarding, methods of payment supported, vertical and geographic reach, and overall cost are all important qualifying attributes in evaluating the strength of payment gateway offerings.
Through The Strawhecker Group’s (TSG) Gateway Enterprise Metrics (GEM) platform, and the separate annual Payment Gateway Directory sponsored by NMI, TSG has continually seen the diversity in capabilities and performance of gateways and how they impact business in this eCommerce focused time. As part of our continuous research, TSG is pleased to share a few interesting notes and key trends uncovered from this year’s Payment Gateway Directory which contains over 100 total payment gateways of varying sizes.
- Represented Verticals – General retail was the most widely served vertical, with over half of all gateways (52%) focusing on the vertical. Healthcare (22%), Restaurant (19%), Education (14%), additionally made up meaningful percentages of industry focus for the analyzed gateways.
APIs – 57% of gateways analyzed have open developer center pages with full access to their APIs available without needing credentials. 18% of the gateways were classified as having “quasi-public” API sets where APIs are not inaccessible to third parties, but require an additional step such as filling out API access forms or creating sand box accounts in order to access.
Setup Fees and Monthly Costs – Of the analyzed gateways, 24% charged a gateway setup fee and 50% charged a monthly fee. The 50% of gateways that charge a monthly fee is down from 74% of gateways that charged a monthly fee a year ago, potentially due to the COVID-19 pandemic.
Geographic Focus – Most gateways analyzed in this year’s directory focus on the North American region. Over a third of gateways have the ability to serve Europe with additional sizable pockets of representation in the directory from gateways that serve the APAC and Latin American regions.
Corporate Structure – Only 31% of gateways are operated as or subsidiaries of public companies. While it may be a popular assumption that the most used and trafficked online gateways are operated by the largest public corporations in the payments industry, the nearly 7 out of 10 private gateways that are represented in the 2020 directory may indicate that a substantial amount of gateway volume is handled by independently operated and lesser known entities.
Reporting Functionality – Virtually all analyzed gateways (99%) offer some sort of reporting functionality online with a dashboard with a slightly smaller amount (94%) of gateways that include a reporting API that allows merchants or integrators to query for reporting data on-demand.
Other Year Over Year Change in Functionality – Overall, the landscape of features offered by the stable of gateways has changed minimally from 2019. The same percentage of gateways from 2019 offer PayPal functionality (42%) while gift card functionality has only increased marginally amongst analyzed gateways by 2% to having functionality across 60% of gateways.