Alternatives to traditional credit and debit cards are now processing €165bn ($214bn, £133bn) annually – 22 per cent of global e-commerce – and that's just the start as the next generation of consumers grows up without seeing a plastic card.
The numbers come from WorldPay, which should know a thing or two about online payments, and are accompanied by an interactive map showing how country-specific payment schemes risk creating islands of commerce and are already making it harder for companies with international aspirations.
Alternatives to card payments include real-time bank transfers, direct debits, electronic wallets, paper-based payments and costs tacked onto a mobile-phone bill, but the popularity of such schemes is very regional. PayPal, for example, dominates in the UK and US but is almost unknown in the Netherlands, where iDEAL-moderated bank transfers dominate.
That makes it harder for a UK company using PayPal to sell into the Netherlands, or Germany, or France, or just about anywhere else in Europe (with the notable exception of Italy), despite the international banking agreements which should permit international commerce.
Despite that, WorldPay reckons alternatives are set to grow, predicting that by 2015 more than half of the world's e-commerce payments will be made using such alternative schemes, to the cost of the credit card companies (WorldPay provides services to both sides, so is primarily interested in increasing the overall number of transactions).
Explaining the growth, WorldPay's report shies away from the obvious cost advantages and instead points out that the reluctance of traditional credit cards (and PayPal) to sully themselves with gambling or porn has driven consumers into the arms of alternative suppliers.
Not that this is necessarily a bad thing; WorldPay reckons fraud isn't significantly higher among the 230 alternative payment mechanisms running around the world, though as they continue to proliferate some will no doubt prove susceptible to keyloggers and suchlike. What is clear is that electronic payments are undergoing an extremely slow revolution, and like any revolution there will likely be blood on the steps before it's over. ®
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