While card payments continue to dominate Internet shopping, consumers who are buyers or sellers at online auctions are increasingly turning to e-payment mediators to purchase their goods, according to a new study from ESP Consulting.
The report, "Person-to-Person (P2P) Internet/Electronic Payments," surveyed 3000 online shopping households. Overall, 46% of respondents limit their online purchases to the general retail arena, while the remainder (54%) are active buyers and/or sellers at online auctions.
Among online retail shoppers, 73% used a credit card to pay for their most recent purchase while 18% used a debit card. By contrast, just 1% of online retail shoppers used a P2P service for their most recent purchase.
Leon Majors, ESP president, comments: "Retail shoppers are definitely card-oriented with growing interest in using debit cards. In contrast to the off-line POS world, debit card users outnumber cheque users three-to-one."
Among online retail shoppers, just 7% pay for their purchases with a cheque money order.
The payment habits of online auction buyers are dramatically different than online retail shoppers. While just 14% of auction buyers report that they used an online payment for their first online auction purchase, more than one-third (37%) used an online payment service to pay for their most recent purchase. By contrast, cheques and money orders combined were used by 50% of auction buyers for their first purchase, but by only 29% for their most recent purchase.
Auction buyers express a strong preference for online payment services that increases as the buyer's level of activity increases. Overall, one-third of auction buyers say they prefer online payments over all other online payment options, and this rises to 56% among buyers who made between four and 10 auction purchases over the last six months, and to 66% among buyers who made 11 or more purchases.
Convenience (30%) and speed (26%) are the primary reasons auction buyers prefer online payments. Security is cited by 15% of auction buyers preferring online payments as a justification for their preference.
ESP points out that despite buyer preferences, use of payment media at online auctions is controlled by what the seller will accept. One-third of buyers that paid by cheque and 40% who paid by money order for their last auction purchase used that method because it was the only method the seller would accept.
Among sellers who accept online payments, ease of use, security, and buyer convenience are the predominant reasons for acceptance. By contrast, sellers that do not accept online payments are most likely to cite lack of experience or knowledge (23%) as the reason, while cost and complexity deter another 20%.