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Alternative payments only account for a small proportion of ecommerce transactions in the US and UK, however methods such as e-wallets, direct debits and cash on delivery continue to show strong growth in other regions.

Therefore it’s a feature that businesses can't ignore, particularly at a time when many e-tailers are seeking to expand into international markets.

A new report from WorldPay highlights the way in which the use of alternative payments (AP) differs across global markets, with PayPal shown to be the most popular AP method globally, though Chinese companies Alipay and Tenpay are also popular and growing at a faster rate.

It’s estimated that alternative payments accounted for 43% of all online transactions in 2012, a figure that is predicted to rise to 59% by 2017 (though predictions should always be treated with some scepticism).

Leading alternative payments - size and growth

Breaking down alternative payments by region:

  • Europe: ecommerce was worth $579bn in 2012, with 41% of transactions made using alternative payments. E-wallets are the most popular AP method.
  • North America: ecommerce was worth $625bn in 2012 in a market dominated by card payments (71%).
  • APAC: e-wallets were used for 23% of transactions in an ecommerce market worth $461bn in 2012.

To show exactly how the use of AP varies between cultures, here’s a closer look at the US and Chinese ecommerce markets. Or for more on this topic, read Ben Davis' blog post on why 2014 might be the year of 'Buy with Google'.

China

Almost half (44.3%) of online transactions in China are made using e-wallets, with Alipay alone accounting for a massive 30% of all transactions. 

The other major player is Tenpay which is used for 13.3% of transactions, leaving other international providers such as PayPal with less than 1% of the market.

In comparison, card payments account for just 15% of the Chinese market, while cash on delivery is used for 10.9% of transactions.

Ecommerce mix by payment type - China

US

Card payments dominate the US market, accounting for 71.5% of online transactions.

E-wallets make up almost a fifth (17.6%) of transactions, with PayPal accounting for the vast majority of those payments (16.2%). Google Wallet is a very distant second with just 0.7% of transactions.

Mobile devices are used to complete 1.2% of payments, with mobile wallets being used for 0.7% of those and direct carrier billing making up 0.5% of the total.

Ecommerce mix by payment type - US

The full WorldPay report is available to download here.

David Moth

Published 22 January, 2014 by David Moth @ Econsultancy

David Moth is Editor and Head of Social at Econsultancy. You can follow him on Twitter or connect via Google+ and LinkedIn

1680 more posts from this author

Comments (1)

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Fergus

Hi David,

Presumably that prediction was released by PayPal. Provided eCommerce stores have a merchant account they will push Credit Card payments before PP as a preferred payment option. PP fees are huge compared to what we pay for Worldpay. And with 3D secure we have not had a charge-back in over 16 months.

That's not say that PayPal's TV and other media advertising won't have an effect on the consumer behavior and cause them to choose the PP payment option.

Just for a real comparison let's say we have a sale complete for €800 on the website with a debit card. The fees for Worldpay will be 0.16c and for PayPal €32.35. That €32.35 has to come our markup after taking of the VAT.

So heres hoping eWallets either shrink or stop charging huge rates and more importantly stop charging credit card rates on debit cards.

Fergus

over 2 years ago

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