Global Market Insights Inc.: Utility Applications Will Expand Payment Gateway Industry Outlook

Utility providers are gradually accepting the trend for digitalisation and the emergence of key payment gateway solutions has enabled them to integrate fast and reliable platforms to enhance the consumer experience.

Hrishikesh Kadam, Global Market Insights, Inc.Hrishikesh Kadam, Global Market Insights, Inc.
Hrishikesh Kadam, Global Market Insights, Inc.

This growing level of acceptance has been identified by analysts at Global Market Insights, Inc., and is detailed here in this guest post for The Fintech Times by Hrishikesh Kadam.

A graduate in electronics and telecommunication engineering, Hrishikesh has always found writing fascinating. Driven by a never-ending passion for content creation combined with a bit of experience in writing personal blogs, Hrishikesh blends his technical knowledge and expertise to pen down articles for numerous online portals.  

The payment gateway industry is fast heading towards a stage of robust technological transformation and growth as consumer demand for digital payments intensifies. From grocery shopping and household bills to digital banking and online reservations, cashless payment is a preferred option among many customers.

The ongoing Covid-19 crisis has sparked a new phase of digitalisation across every business vertical. For the energy and utilities sector, it has created a slew of new opportunities. As people demand a more seamless digital experience, utilities are banking on digital payments to keep their current customers happy while engaging new ones. Unprecedented internet access and the widespread adoption of handheld devices will only push the digital trend forward.

Projections show that the global payment gateway market size could be well over $60 billion by the end of 2027. The emerging applications in the energy sector will bolster the technology adoption and acceptance commercially. Payment gateway providers are poised to witness tremendous opportunities as e-payment services such as mobile wallets are required for paying utility bills. Add to that the fast-growing renewable energy space and the emergence of pay-as-you-go solutions for consumers, which means payment gateway developers have a big task ahead of them to integrate real-time data analytics and the ability to accept new payment options like cryptocurrencies.

Hosted payment gateways enable fast, secure utility billing and payment

Across industries, the use of digital payment channels has escalated to an all-time-high. There has been a monumental rise in consumer demand for digital engagement with their utilities. This is because online payments are faster and provide customers the freedom and flexibility to pay. For utilities, it improves cost control and customer retention.

Utilities that have implemented a customer-centric, easy-to-use billing and payment process anticipate that most consumers will prefer digital channels in the future. To keep their customers well-serviced, more utility providers are now looking to improve their digital offerings. Many of them are adopting a multichannel approach to effectively compete in this digital era. They are also collaborating with cloud providers to host their payment channels.

Quoting a recent instance, Mishawaka Utilities, a utility company based in the American state of Indiana, announced that its customers can now use PayPal as a payment option. Besides PayPal, customers can also pay via other options such as Venmo. Mishawaka Utilities partnered with Invoice Cloud, a trusted and secure e-payment gateway service provider, to help more than 30,000 customers view and pay their bills safely.   

Hosted payment gateways will continue to be a preferred choice among utilities as they explore ways to support the continued use of reliable online billing and payments. The hosted segment will hold a substantial share of the payment gateway market through 2027.

Utilities expand customer payment options amid Covid-19 crisis

Businesses of all sizes have had to re-evaluate their strategies in order to maintain critical cash flow as the Covid-19 pandemic escalated from a health crisis to a financial crisis. As the pandemic continues to have an unprecedented impact on people’s personal as well as professional lives, it seems like the right time for utilities to review their bill payment channels and improve customer satisfaction while boosting customer engagement.

The year 2020 witnessed the arrival of several new digital payment solutions that utilities can leverage to enable faster, easier, and efficient transactions. In June, for example, PayGo, a provider of integrated smart metre-based payment solutions for utilities, had collaborated with Amazon Web Services (AWS) for a new cashless payment system. PayGo selected AWS for cloud services to improve agility and leverage AWS’ robust security services and capabilities.

The PayGo Utilities platform enables prepaid as well as post-paid billing, which means electricity, water, gas, of internet companies can provide their customers control over paying for their usage. Besides simplifying payments for customers, the proprietary technology boosts the capability of smart metres to improve sustainability, lower utility costs, and improve customer satisfaction.

While the popularity of digital payments and mobile wallets rises, the risk of cyberattacks increases as well. Therefore, it will be paramount for utilities to heighten security measures for protecting critical financial information and payment systems. Accordingly, companies are looking to restructure their cybersecurity strategies to make online bill payments safer for everyone.

To thrive in the post-Covid-19 era, utilities will not only need to advance their digital payments strategy but will also have to keep pace the ever-growing consumer demand and expectations. The payment gateway industry is set to witness an array of new opportunities and challenges following the pandemic.

How can utilities expand energy access through digital payment gateways?

The Better Than Cash Alliance – a global partnership of government, international organisations, and companies that accelerates the transition from cash to cashless payments – had published a report back in July 2017 urging energy stakeholders across the world to facilitate the widespread adoption of digital payments.

Released by the Sustainable Energy for All (SEforALL) initiative, the study highlighted the fact that more than one billion people worldwide live without electricity. It estimates that the switch to cashless payments could open up access to sustainable energy for billions of people globally.

According to the report, the implementation of targetted and progressive policies such as digital payments into energy access agendas could help provide more than 150 million people access to sustainable electricity annually by 2030, the minimum required for universal access, as per the World Bank and the International Energy Agency (IEA). It is also outlined that if the world is to accomplish global energy access, the development of inclusive digital payment ecosystems and the expansion of existing payment systems will be critical.

One of the recent initiatives to strengthen the digitisation of the utility industry was the introduction of a subscription-based service by technology company Uplight, in the U.S. It is offering the first subscription-based service for customers including digital payments, savings, and energy usage information. Through the service, consumers will have to pay only a fixed amount every month and can also provide timely feedback. The project indicates a strong potential for payment gateway providers as and when similar services are introduced worldwide, over time.

Robust digitalisation initiatives are bound to have a positive impact on the payment gateway market over the next decade. While the lack of awareness is a critical factor limiting the adoption of online payments in many areas, ongoing efforts, and initiatives to educate customers on the benefits of digital transactions will certainly augment the market scope. The next few years will witness rapid adoption of digital payment channels among small and medium businesses as they explore new ways to stand out in the ever-intensifying competitive landscape.