Report: Alternative Online Payment Volume Set to Surge 73.6 Percent over Five Years (Jan. 4, 2013)
Jan. 4, 2013
Alternative payments services such as PayPal, Bill Me Later and Checkout by Amazon are surging in growth and overall purchase volume, on track to rise 73.6 percent over the next five years as consumers embrace streamlined online payment processes, according to a new report from Javelin Strategy & Research. In its fifth annual “Online Retail Payments Forecast 2012-2017,” Javelin said total purchase volume for such alternative online payment services reached $51.6 billion at the end of 2012 and that number will rise to $89.6 billion by 2017. Recently consumer adoption of Bill Me Later has surpassed that of Google Checkout and is “quickly catching up” to Checkout by Amazon/Amazon Payments, according to the report. Consumers choosing Bill Me Later for online purchases increased from 1 percent in 2010 to 14 percent in 2011, and currently about 21 percent of all consumers using an online alternative payment method are opting for Bill Me Later, Javelin said.
Overall, U.S. online payments grew 12.8 percent last year to $318 billion from $282 billion in 2011, Javelin said. Although still not as prevalent as credit and debit cards for online purchases, reloadable prepaid cards’ online purchase volume is on track to increase 51 percent to $31.1 billion by 2017, up from $20.6 billion, according to the research. Gift card purchase volume for e-commerce will likely rise 81 percent by 2017 to $3.8 billion from $2.1 billion in 2012. The use of credit cards for online purchases is on the rebound after declining during the recession, rising 18.6 percent last year to $134 billion, up from $113 billion in 2011. Javelin projects debit card online purchase volume will increase 24.2 percent over the next five years to $113.9 billion from $91.7 billion.
Mobile payments still account for only a fraction of all online transactions, with 6.4 percent of all online purchases originating from a mobile device compared with less than 0.01 percent of all in-store purchases made with a mobile phone. But the advent of mobile shopping “is unquestionably the most near-term game-changer” for e-commerce, the consultancy predicts. For its report, Javelin collected online survey data from 3,000 consumers and reweighted results using data from other sources, including payment card networks and eBay Inc.
