The Paypers: The secrets behind the success of e-wallets in the global online payment market

Posted on: Online Payment | yStats in the Media on March 09, 2017

Yücel Yelken, yStats.com: E-wallet is the top payment method by share of global ecommerce, but not in terms of share of online shoppers

One of the top trends in global online payment market is the rise of alternative payment methods. The combined share of digital wallets, bank transfer, pre-paid cards, cash-on-delivery and other alternatives to online payment by credit or debit card reached more than 50% of global ecommerce sales and is projected to continue rising in the future. Of these methods, the most prominent one is e-wallet, a term used to collectively describe digital payment systems like PayPal and Alipay. Both on the global scale and locally, this method is gaining acceptance among online shoppers and increases its share of online payments.

Interestingly, e-wallet is the top payment method by share of global ecommerce, but not in terms of share of online shoppers. Multiple consumer surveys conducted internationally point to credit card as still being the payment method most used by global online shoppers, with e-wallets ranking second. The reason for this inconsistency is the fact that consumer surveys look at the average across all respondents, while not considering the major differences in the amount of ecommerce sales contributed by various countries to the global market size. Taking this factor into account, China makes a big difference, reversing the ranking of e-wallets and credit cards in global online retail. According to some market estimates cited in our reports, the People’s Republic accounts for nearly half of worldwide retail ecommerce and close to one-third of cross-border online sales. Due to popularity of Alipay and similar third-party payment services, China has the world’s highest share of online shoppers using e-wallets, which account for more than half of the ecommerce payment value.

China, however, is not the only online market where e-wallets dominate. Digital payment services, PayPal especially, is the top payment method used by online shoppers in countries such as Mexico, Italy, and Spain. Moreover, our recent research reveals that there is a clear trend towards more usage of e-wallets even in countries where credit cards traditionally reign in online payments. The UK is one example: digital payment services in total gained several percentage points in online shoppers’ usage over the past few years and some surveys even indicate that it is more trusted than credit or debit cards for ecommerce purchases. Trust is key; security is the top factor that online shoppers consider when choosing a method to pay online, whether domestically or cross-border. Even in the US, a top market for credit card payments, credit cards are preferred by around half of online shoppers, but only about one-third think that it is the safest method. On the other hand, the difference between the share of online consumers preferring payment by PayPal and ranking it as the safest method is nearly double, indicating that also in the US e-wallets’ share could increase in the future.

Read more at: http://www.thepaypers.com/expert-opinion/the-secrets-behind-the-success-of-e-wallets-in-the-global-online-payment-market/768246

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