This report looks at the current state of the online payment market, what consumers expect from their online payment providers, and how new entrants are threatening the role of the payment card in the future online payment space.
Description
INTRODUCTION
The growth of online commerce has driven huge change in the payments landscape. While payment cards remain the default option for the majority of transactions, non-bank entrants are taking a growing share of the global market. This report provides deep insight into the trends driving change, as well as the payment innovations threatening the future role for cards in online commerce.
FEATURES AND BENEFITS
Understand the growth of the global online payment space and the factors that have driven the market.
Successfully target online shoppers by understanding what they want and how they pay for online products and services.
Plan your strategy effectively by learning about key barriers to online shopping and consumer preferences to online payment tools.
Gain insight into how the new players in the online payment market are threatening to the payment cards industry.
HIGHLIGHTS
Datamonitor's Online Consumer Payment Model shows that the size of global online commerce reached $727bn in 2011. The credit card is still a clear choice for online shoppers due to its convenience, but security remains a major concern that the card industry faces. Only 19% of consumers indicated that they use credit cards for their security.
Online commerce will continue to grow across the 21 countries featured in the report, but the US is about to be overtaken by China. Datamonitor forecasts that 2014 will be a turning point, with the Chinese and the US online commerce markets drawing level, leaving China poised to overtake the US in early 2015.
The blurring of online, mobile, and offline commerce will intensify over the next 12 months. The pace of technological change means that the challenge has now moved on from providing a payment solution for a particular channel to creating a payment tool that creates a consistent user experience through several different payment channels.
YOUR KEY QUESTIONS ANSWERED
How big is the online payment market, and which merchant categories do consumers spend their money with?
What are the barriers to online shopping in my market, and how can these be overcome?
What is the expected growth for the online payment space and where will this growth come from?
How do consumers make online payments, and how much of a threat is coming from non-card payment products?
What are the opportunities and threats for the global payment industry, both now and in the future?
Table of Contents
TOC
OVERVIEW
Catalyst
Summary
EXECUTIVE SUMMARY
Online payments: where we are today and how we got here
The concept of online commerce is well received, but barriers remain
The majority of consumers in developed countries have purchased online
There are three barriers to online commerce: infrastructure, security, and the online experience
Generational change will support further growth in online commerce
Convenience and comfort are the driving factors behind choice of online payment tool
Credit cards are still the number one choice for consumers
Consumers are comfortable with credit cards for online payments, but have concerns about their security
Consumers favor digital wallet services due to their convenience and perceived security
Cash on delivery is still a dominant payment channel in emerging countries
Online fraud has a substantial impact on consumer behavior, driving some away from online commerce
THE FUTURE OF ONLINE PAYMENTS
Growth in online commerce will be strongest in the east
Online commerce will reach $1.4tn by 2014
Low value digital services and big ticket items will play a key role in the future growth of online payments
Digital wallets and online banking e-payment will erode the share of payment cards in online payments
The weak user experience will see cards continue to face challenges from dedicated online payment tools
Growth in the use of digital wallets will drive the integration of online, mobile, and offline commerce
OBeP has the potential to be popular among customers, but poses challenges to the issuing business
APPENDIX
Supplementary data
Definitions
(Untitled sub-section)
Methodology
Further reading
Ask the analyst
Disclaimer
TABLES
Table: The value of online payments by country ($m), 2011
Table: The average online spend per household by country ($), 2011
Table: Online spend as a proportion of retail spending by country, 2011
Table: Online commerce penetration by country, 2011
Table: Reasons for consumers not shopping online by age group, 2011
Table: Reasons for consumers not shopping online (infrastructure factors), 2011
Table: Proportion of consumers who have experienced online fraud and their level of concern toward online fraud in the future by country, 2011
Table: Responses to "I prefer to be able to browse items in a store" as a reason for not shopping online by age group, 2011
Table: Popularity of online payment tools among consumers globally, 2011
Table: Different factors that influenced consumers' choice of online payment tools, 2011 (part 1)
Table: Different factors that influenced consumers' choice of online payment tools, 2011 (part 2)
FIGURES
Figure: Credit cards are the number one payment tool used in online commerce
Figure: The digital wallet acts as a payment hub for a consumer's online transactions, cutting the funding source out of the loop
Figure: American Express introduced Serve to offer online, offline, and mobile payment services
Figure: Visa announced that V.me will launch in early 2012
Figure: OBeP leverages the existing Internet banking infrastructure
Figure: 3-D Secure become a global standard for online payment authentication
Figure: Mobile OTPs can be used with 3-D Secure to increase online payment security
Figure: MasterCard launched the world's first OTP display card in 2010
Figure: The US remained the biggest online payment market in 2011
Figure: Households in Sweden and Australia spent the most over the Internet
Figure: Online spending accounted for 4.7% of the global consumer retail total in 2011
Figure: Credit cards are the number one payment tool used in online commerce
Figure: Choice of online payment tools varies by countries
Figure: Credit cards are most popular in Japan, but the US still accounts for the largest level of online credit card transaction values
Figure: Cash payments account for a sizable proportion of online commerce transactions
Figure: Flight and hotel bookings are still the biggest online payment sector
Figure: Electrical goods and clothing are larger than the flights and hotels category in Russia and South Korea
Figure: Almost one in three consumers globally have purchased products or services over the Internet at least once
Figure: Online experience issues are the main reason consumers do not shop online, but the youngest demographics also have issues with infrastructure
Figure: Consumers face different hurdles to shopping online in different countries
Figure: Lack of access to payment tools is a major barrier to online commerce
Figure: The fear of fraud has always been a major influence on the online channel
Figure: Some consumers do not like shopping over the Internet, and prefer to be able to browse items in a store
Figure: An inability to browse items instore is not a major barrier to online commerce for the younger generations
Figure: Credit cards are still the number one choice for online payments
Figure: Different factors influence consumer choice of online payment tools
Figure: Cash on delivery is still a n important payment method in countries with underdeveloped payment infrastructures
Figure: Online fraud has a substantial impact on consumer behaviors
Figure: The global online payment market is expected to reach $1.4tn by 2014
Figure: China is set to become the world's largest online commerce market
Online Payments: Cards Not Present? published by Datamonitor in February 16, 2012. This report consists of Pages: 67 and the price starts from US $ 5250.
