In 2014, 16.5 billion card payments were made in e-commerce totalling $2.1 trillion and that figure will grow up to $5 trillion in the next four years, according to research firm RBR.
The stratospheric increase is being attributed to the increased penetration of smartphones and tablets, but also the proliferation of online merchants.
The payment cards sector is benefiting from this development, and e-commerce now represents 11% of the $20 trillion spent on payment cards worldwide, a share which is forecast to increase to 13 per cent of the total $38 trillion card spend projected in 2020, RBR said in its Global Payment Cards Data and Forecasts to 2020 report.
However, despite e-commerce card payments increasing rapidly – they rose by 28 per cent in 2014 compared to 15% for card payments overall – they are not the only way people choose to pay online. One should not discount alternative forms of payment such as PayPal and cash on delivery, which RBR says is a popular method of payment in Eastern Europe.
“In several countries in central and eastern Europe, a significant proportion of online shoppers prefer to pay by cash on delivery to enable them to inspect the quality of the goods they are purchasing before making payment.”
Card security concerns must be addressed
According to RBR, there continue to be security concerns associated with using cards online in certain countries, such as Nigeria, where there is the perception that e-commerce payments are easy targets for fraudsters. Greater implementation of 3D-Secure protocols should persuade consumers that they can make such payments securely.
Asia-Pacific region loves e-commerce
Unsurprisingly, the region which boasts the two countries with the largest populations in the world as well as some of the world’s biggest e-commerce companies accounts for a third of the volume and more than half (55 per cent) of the value of global e-commerce card payments. No other world region records more than 30 per cent of the total e-commerce card spend.
E-commerce proved especially popular in China, where e-commerce makes up 15 per cent of the value of all card payments. Traditional merchants are increasingly setting up websites in China, and the country also boasts homegrown e-commerce giant Alibaba, which had its biggest ever sales in one day back in November – on Singles Day, the biggest online shopping day in the world, held every year on 11th November.
Alibaba consumers spent an astounding $14.3 billion on Singles Day. By the close of trading, spending just under $15 billion in one day marked a 60 per cent increase from last year. It took just 11 hours and 50 minutes for consumers to surpass its 2014 sales.
The convenience factor
Furthermore, the evolution and proliferation of mobile technology has made it increasingly convenient to surf the web, meaning it is increasingly common to order goods online rather than to purchase them at physical outlets, especially with the added convenience of smartphones and tablets which allow easy internet access on the move.
Also, let’s not forget Samsung and MasterCard trying to start a trend of integrating payment capabilities into large household appliances…
“As the pace of everyday life accelerates, making the ability to reduce visits to brick-and-mortar shops a welcome development for many people, the impact of e-commerce will become even greater in the coming years. This will translate into e-commerce card payments accounting for a higher proportion of the value of all card payments.”
RBR predicts this will reach 13 per cent by 2020.
The Emerging Payments Association discuss the impact of Brexit on the fintech industry at the latest payments industry event.
Jonathan Quin, co-founder and CEO of World First, explores how established financial institutions and newer fintech disruptors stand to benefit from collaborating with one another in the fast-moving financial services sector.
With advancements in technology and the subsequent availability of data, it seems surprising that banks seem to know less about their customers than ever before.
In an era where cheques are largely a thing of the past for organisations that operate within these shores, many people will be surprised to learn that many overseas B2B payments are still made by cheque.