Payment Hardware Security Module (HSM) Revenue
Source Research:
Payment HSMs: The Emerging HSMaaS Opportunity
Hardware shipments dominate the payment HSM market
Shipment revenue forms the brunt of the payment Hardware Security Module (HSM) market, and payment HSM Average Selling Prices (ASPs) tend to command higher margins than general purpose HSM. In large part, this is because the payment space is highly regulated. Not only is PCI certification complex, but customers need to undergo audits on their end for broader payment industry compliance, meaning customer service subscriptions for payment HSMs are almost always required. To ensure maximum compliance, customers tend to invest in all available services and warranties from the payment HSM Original Equipment Manufacturer (OEM). The sunk costs for payment HSMs are high; therefore, the transition to cloud-based services is incremental, rather than exponential.
However, the availability of a fully compliant and cost-effective payment HSMaaS is likely to entice some customers that may want to divest themselves of the complications of administering and configuring a payment HSM on-premises. The opportunity for the payment HSMaaS market is clear, but has a significant risk-averse barrier to overcome from the traditional user base.
Outlook for payment HSMs
Below summarizes the trajectory of the payment HSM space:
- 2023: Fairly flat year for payment HSM shipment revenue due to general macroeconomic pressures. Service revenue is primarily dominated by HSM OEMs, but first payment services from Cloud Service Providers (CSPs) emerge, starting with Azure in 2022 with Azure Payment HSM (dedicated service) and AWS in 2023 with AWS Payment Cryptography service (HSMaaS).
- 2025 to 2026: Slow market traction for payment HSM service spending, but shipment revenue picking up again, with growing demand in open banking, digital card transactions, mobile and the Internet of Things (IoT) payments, crypto assets, and Central Bank Digital Currencies (CBDCs) growing the installed base.
- 2027-2028: Payment HSM-as-a-Service (HSMaaS) gains traction as trust in the offerings is cemented, driving both shipments and service revenue as more providers enter the market.
