17 August 2017
visit www.avoka.com

Alternative payment methods stealing market share from bank cards online - study

11 November 2008  |  11442 views  |  0 Online Buy and sell button

Consumers shopping online are increasingly turning away from traditional financial institution-controlled credit and debit cards to embrace cash-based alternative payment options, according to an analysis by US-based Javelin Strategy & Research.

Javelin's 2008 Online Retail Payments Forecast suggests the current economic turmoil is taking its toll on credit card usage for online purchases, paving the way for further uptake of alternative methods during the busy holiday shopping season. As the trend takes hold, nearly one-third of retail transactions are expected to be made using alternative payments by 2013, says the study, representing a growing challenge to banks and traditional card schemes.

"Although Javelin's forecast predicts online debit and credit card usage will continue to dominate and grow," says Javelin president and founder, James Van Dyke. "Alternative payment methods are becoming a preferred choice by many consumers shopping online and will continue to grow over the next five years, steadily increasing to one-third of the online retail transaction volume."

Van Dyke adds: "During this year's holiday shopping season we project $7.8 billion will come from alternative payments versus $35 billion from traditional online payment methods."

The overall projected growth for online payments is expected to reach $148 billion in 2008, climbing to $268 billion by 2013. The shift in growth rates during the five year period trends faster for alternatives, especially those that have built brand awareness with consumers, such as PayPal; as well as alternatives for traditional companies such as pre-paid and stored value loyalty cards. Up-and-coming contenders, such as Nacha SVP, Google Checkout and Revolution Money among others, will further queer the pitch for the traditionalists.

Bruce Cundiff, Javelin's director of payments research and consulting, suggests that banks and traditional card brands that don't want to risk erosion of online transaction volume should expand their own prepaid card product offerings, while partnering with alternative providers.

"By integrating alternative payments, financial institutions will maintain their position and status as the 'agent' for online payments," he says.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Amazon launches online payments services for merchants

Amazon launches online payments services for merchants

30 July 2008  |  8201 views  |  0 comments
Crunch hit Brits turn to online shopping

Crunch hit Brits turn to online shopping

18 July 2008  |  5635 views  |  0 comments
One in eight EU adults too scared to shop online

One in eight EU adults too scared to shop online

12 February 2008  |  5019 views  |  0 comments
Amazon invests in Bill Me Later

Amazon invests in Bill Me Later

13 December 2007  |  7016 views  |  0 comments
Paypal opens online shopping site for Christmas

Paypal opens online shopping site for Christmas

15 November 2007  |  6811 views  |  0 comments
Amazon introduces Web payments application for developers

Amazon introduces Web payments application for developers

03 August 2007  |  5293 views  |  0 comments
Online shopping vouchers launched in UK; European roll-out planned for 2007

Online shopping vouchers launched in UK; European roll-out planned for 2007

01 November 2006  |  5857 views  |  0 comments
Pre-paid Paysafecard set for launch in UK

Pre-paid Paysafecard set for launch in UK

30 August 2006  |  9653 views  |  0 comments
PayPal to roll out virtual debit card

PayPal to roll out virtual debit card

04 July 2006  |  19475 views  |  0 comments
Banks can't compete with PayPal - Gartner

Banks can't compete with PayPal - Gartner

13 September 2005  |  11212 views  |  0 comments

Related blogs

Create a blog about this story (membership required)
visit www.worldpaymentsreport.comvisit www.abe-eba.euvisit www.niceactimize.com

Top topics

Most viewed Most shared
Coinbase raises $100mCoinbase raises $100m
10354 views comments | 14 tweets | 14 linkedin
DBS Bank launches online car selling marketplaceDBS Bank launches online car selling marke...
9742 views comments | 13 tweets | 11 linkedin
China preps central clearing house for mobile payments providersChina preps central clearing house for mob...
9632 views comments | 8 tweets | 15 linkedin
HSBC automates documentary trade processing with IBMHSBC automates documentary trade processin...
8559 views comments | 6 tweets | 21 linkedin
Monzo appoints Curve co-founder Foster-Carter COOMonzo appoints Curve co-founder Foster-Car...
8042 views comments | 1 tweets | 2 linkedin

Featured job


Brussels or Frankfurt

Find your next job