What is the footprint of the Big Four Payment Gateways?
In 2015, PayPal, Square, Adyen and Stripe controlled 90 percent of the eCommerce payments market, according to Crone Consulting, but their share has been slipping ever since and is close to 55% gross payment volume globally (excluding Alipay and WeChat Pay in China) while new entrants have cornered the rest.
While Paypal leads all the other gateways in terms of payment volumes, the four have different business models really
- Paypal has significant in-store payment processing as well as funds transfer operations which add up to its TPV.
- Both Paypal and Square have consumer facing branding and Square is focused more on in-store merchant payments.
- Stripe and Adyen are pure online acquirers with no consumer branding and relatively underdeveloped offline products, unlike Paypal and Square.
- Adyen is primarily a payment processor that sets up a merchant account, unlike Stripe which processes transactions on behalf of a business.
Therefore, despite Paypal's big lead over the other three, the eCommerce-only payment volume of Paypal will be a lot closer to that of Stripe and Adyen.
In terms of merchant acquisition, Paypal has combined its online wallet consumers with a gateway accepted by more than 30M merchants. Within eCommerce, there are at least 3.7M valid and substantial merchants using Paypal.
However, a closer look at the composition of merchant users reveals that Paypal has a larger user base among small merchants within the B2C Physical Goods segment of eCommerce while Stripe has a similar volume in mid-market and a greater footprint in the enterprise segments.
Stripe's customers include the likes of Google, Slack, Zoom, Lyft, Amazon, and Salesforce but it generates a considerable volume of payments via Shopify Payments which is powered by Stripe. In terms of aggregate annual GMV, the merchant bases of Paypal and Stripe are comparable in size but Stripe's clientele has a higher average annual GMV per merchant than Paypal's.
Despite Stripe's higher share of merchant users, its gross payment volume is lower than that of Adyen whose user base has a higher per merchant annual GMV. Adyen has a good base of enterprise customers and has always had a better point-of-sale offering than Stripe.
Square's gross payment volume includes payments made across its POS terminals and its popular P2P offering, Square's eCommerce footprint is therefore much smaller than its retail seller base and tends to provide solutions for small merchants.