Credit cards: today and tomorrow
While credit cards continue to be the top choice overall, more and more consumers are demanding multiple payment options. A payment industry study showed that 50% of customers will abandon a sale if their preferred payment type is not available.
Credit cards still make up 59% of international online purchases, 3 but they are not expected to see the exponential growth being experienced by emerging alternative payment options, such as eWallets. In fact, according to the newest research, credit cards’ share of online payments is expected to decline from 60% today to 44% by 2012. Already, 41% of online consumers prefer alternative payment options over credit cards.
Fraud is a factor
The primary reason people veer away from credit card payments online is security. Consumers who maybe watch too much news and are sacared of fraud are becoming increasingly reluctant to part with their financial information, particularly credit card information. They feel that other payment forms provide greater protection from fraud or misuse and better protect their identity.
The increasing number of alternative secure payment options may be causing experienced online shoppers to jump the credit card ship, but new shoppers who previously refused to use credit cards online are now poised to enter the market, creating a new opportunity for online merchants. The fact is credit cards present a security risk to the merchant as well as to the consumer. Online retailers are forced to depend on remote transactions, or Card Not Present transactions. This reliance leaves merchants open to fraud, disputes and charge-backs.
Global payment trends
A growing consideration for merchants is the expanding international scope of online business. With many European, Asian and South American markets still emerging, it pays to consider cultural payment trends in these up-and-coming markets.
- In the United Kingdom, more than two-thirds of online shoppers report using debit cards in the past three months with credit cards and eWallets following close behind in popularity
- Online shoppers in France overwhelmingly prefer the flexibility of debit cards but also rely on cheques more than any other country in the world
- Germans choose online bank transfers as their first choice for payment
- Italians prefer prepaid cards more than most other nations
With huge potential for market growth, China is a unique and exciting opportunity for eBusiness development. China’s internet consumption hit 398 billion CNY (53.89 billion USD) in 2007 and is still growing. An overwhelming two-thirds of mainland Chinese consumers pay for online purchases using Alipay. Culturally, credit-based buying is discouraged so cashbased payment options such as COD or domestic debit cards also have a high penetration rate in China.
In a marketplace where consumers are one click away from the virtual door, choice matters. Failure to consider the nuances of debt payment versus cash-based payment options in different markets will seriously limit your opportunity for growth. More importantly, you need to give customers the right choices, which change from region to region.
Alternative Payments
Alternative payment methods are becoming a necessity for global e-commerce. And while the preference of alternative options varies from region to region, the presence of these alternatives remains a vital online sales tool.
As an example, close to 75% of all online buyers now have an eWallet, but even with those numbers, eWallets are only the tip of the iceberg. There are many alternative payment options, and while credit card use is poised to decline, these alternative options are growing. Almost 20% of online users say they use a debit card more now than they did one year ago
One of the most popular global alternatives to credit cards is the eWallet. EWallets are one of the safest and quickest ways to pay online because an eWallet provides peace of mind for both the consumer and the merchant. With already more than 100 million consumers using eWallets worldwide, this option is set to become a leading payment solution. EWallets protect important financial information by acting as a financial firewall between the consumer’s bank account and the merchant.
This allows merchants to capitalize on customers who are unwilling or unable to use credit or debit cards on their sites. Customers can also benefit from eWallet payments because they are instant, frictionless, international and available in multiple currencies.
Internet banking is another large player in the world of online payments. An extension of regular banking, internet banking provides consumers with a familiarity that makes them feel safe and gives the security they demand. The catch with internet banking is that in most cases it can take 2-5 days to process a payment.
Conclusion
What alternative payment solutions you choose to offer will depend largely on your business and the needs of your customers. Familiarize yourself with the options available and the trends affecting your key markets and choose appropriately to maximize the growth and strength of your bottom line.
Look to Web-Merchant Services
To get streamlined processing capabilities that keep businesses profitable and competitive, thousands of enterprise-level merchants choose to partner with us.
With Web-Merchant Services you can get:
- A secure payment gateway for card and non-card processing
- An eWallet with 100% chargeback protection and built-in loyalty programs
- Multiple real-time banking options
- A competitively priced merchant account servic
- Flexible settlement terms to give you the best possible offer
- Fraud monitoring and prevention tools to protect you from bad debt
- Total FREE PCI DSS compliance
- FSA regulated services
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