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Credit cards maintain their lead in global online payments, with alternatives encroaching
Security remains a major issue on the global online payments market. Surveys show that more than a third of Internet users globally who do not shop online cite distrust to online payments as their reason for not making purchases, though this consumer concern varies greatly by country and region.
Moreover, an important trend is integration of payments across various channels. Banks, payment processers, card companies and multi-channel merchants globally are working toward integration of online payments with mobile and POS payment, while mobile wallets start to offer services beyond mobile payments, and merchants increasingly opt for a single payment provider across channels.
Mobile payments, both online and in-store, are predicted to continue strong growth worldwide, with customer adoption improving. About a quarter of the global consumers used their mobile phones for financial or banking transaction last year, and the number of payments with mobile handsets is forecasted to grow rapidly in the next few years to reach several billions by 2018. The region leading worldwide by share of mobile on total B2C E-Commerce payments is the Middle East & Africa.
Competition on the global online and mobile payments market is fierce, with major players developing and employing innovations in recent months. Amazon launched promotion of its Login and Pay processing service for online merchants, while Google launched a prepaid card connected to Google Wallet and plans to expand its payment services further. Visa and MasterCard added a cloud-based solution to its NFC payment offers, using the Host Card Emulation technology. PayPal, which generated almost EUR 5 billion in revenues in 2013, launched a new branding campaign with focus on mobile. Moreover, expansion into online and mobile payments is anticipated from large players Apple and Facebook.
In the USA, alternative payment methods are expanding to rival debit and credit cards in both online and offline retail. A digital currency trend also continues to evolve. The online retail payment market in the USA grew by a small double-digit share in 2013, reaching several hundreds of EUR billion. M-Commerce payments amounted to a medium-high double-digit figure in EUR billion, split almost evenly between tablets and mobile phones. In Canada, online payment by card continued to be the leading method.
In Latin America, the number of internet users and potential shoppers that do not have credit cards has led to substantial presence of alternative payment methods. Only in Brazil does the percentage of the adult population with a relationship with a bank surpass 80%. The online and mobile payment markets in Brazil grow, spurred by regulation, widening penetration and deployment of new technologies. Boleto Bancario was the second most used payment method in Brazil, after bank credit card. In Argentina last year the payment method most used by over 50% online shoppers was credit card, while cash payments upon receipt and such services as Pago Facil and Rapi Pago also popular. In Mexico, the largest share of B2C E-Commerce sales is generated through credit card payment, while the other popular method is cash on delivery.
Cards account for the largest share of B2C E-Commerce transactions in Europe, while digital wallets are in second place. In Germany, invoice remains the leading payment method in online shopping, perceived as both the most secure and most convenient method. In the UK, online payment is the largest contributor to card payment growth in the UK, similar to France.Contrary to Western Europe, cash on delivery remains the dominant payment method in online shopping in Eastern European countries such as Russia and the Czech Republic, though use of credit cards and alternative payment is on the rise there.urchases. E-Commerce transaction with cards in Turkey reached a value of over EUR 10 billion. Also in Estonia B2C E-Commerce transactions with bank cards are significant, with cross-border transactions by far outweighing the domestic ones.
Digital wallets had a substantial share on total B2C E-Commerce payments in the Asia-Pacific region, though still behind credit and debit card. "Security" and "Convenience of the Payment Method" were among the top decision factors in B2C E-Commerce for online shoppers in the region. In Japan, payments in B2C E-Commerce are dominated by prepayment with a credit card, as they also are in South Korea. In China, mobile payments had a boom last year, while also online payments grew by half.
Cash on delivery remains the major payment method in the growing B2C E-Commerce in the Middle East and Africa. This method accounted for almost a half of E-Commerce transactions, while cards accounted for a third. As of 2013, credit card was the online payment method most used in B2C E-Commerce in South Africa, followed by bank transfer. The region’s leader in mobile payments, Kenya, generated a small double-digit number in EUR billion of mobile payments in 2013.
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