Online Payment Providers: Disrupting the Status Quo

Celent: Credit cards are the most popular means to pay for online goods and services, but alternative online payments will account for 26% of e-commerce volume by 2009.

A sea change is underway in the online payments world, with credit cards losing dominance as new payments options emerge. Credit cards accounted for over 90% of online payment volume in 2000, but will only account for a minority of e-commerce dollar volume by 2009. This shift will have significant implications for banks, merchants, and service providers supporting card-not-present risk for online merchants.

Today’s online payment options (such as PIN debit, alternative credit, email, and ACH consumer push) will also offer cross-channel solutions for merchants that operate in the physical and digital World, threatening the traditional brick-and-mortar turf of card issuers. The significantly enhanced consumer and merchant value propositions associated with the next wave of online payment options are making payments strategic assets that can contribute directly to a merchant’s top and bottom line growth if implemented and marketed appropriately.

There is growing recognition among the online community that online payment alternatives to the credit and debit card can do far more than lower costs,t. They can serve as allies to merchants in their quest to convert more prospects into sales in a way that contributes positively to the customer experience and actually lowers risk. As merchants search for any edge that can increase loyalty and lower shopping cart abandonment, they will enlist new providers that can do more to increase their profitability.

http://www.celent.com/PressReleases/20060525/OnlinePayments.htm Publ 20060524