Global Online Payment Methods: First Half 2014

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Press Release

Hamburg, May 21st, 2014

Credit cards maintain their lead in global online payments, with

alternatives encroaching.

Hamburg-based secondary research organization yStats.com has released a new report: “Global

Online Payment Methods: First Half 2014“, which reveals that credit cards continue to have the

largest share of global B2C E-Commerce payments and are likely to maintain that lead in the near

future. However, the fastest growing alternative methods, digital wallets and mobile payments are

increasing their share rapidly, with an annual growth rate of over 40% outpacing other payment

methods. Put together, alternative payment methods are forecasted to increase their share of

online payments to over 50% by 2017.

Security remains a major issue on the global online payments market. Surveys show that more than a third of

Internet users globally who do not shop online cite distrust to online payments as their reason for not

making purchases, though this consumer concern varies greatly by country and region.

Moreover, an important trend is integration of payments across various channels. Banks, payment processers,

card companies and multi-channel merchants globally are working toward integration of online payments

with mobile and POS payment, while mobile wallets start to offer services beyond mobile payments, and

merchants increasingly opt for a single payment provider across channels.

Mobile payments, both online and in-store, are

predicted to continue strong growth worldwide,

with customer adoption improving. About a

quarter of the global consumers used their

mobile phones for financial or banking

transaction last year, and the number of

payments with mobile handsets is forecasted to

grow rapidly in the next few years to reach several

billions by 2018. The region leading worldwide by

share of mobile on total B2C E-Commerce

payments is the Middle East & Africa.

Competition on the global online and mobile

payments market is fierce, with major players

developing and employing innovations in recent

months. Amazon launched promotion of its Login

and Pay processing service for online merchants,

while Google launched a prepaid card connected

to Google Wallet and plans to expand its payment services further. Visa and MasterCard added a cloud-based

solution to its NFC payment offers, using the Host Card Emulation technology. PayPal, which generated almost

EUR 5 billion in revenues in 2013, launched a new branding campaign with focus on mobile. Moreover,

expansion into online and mobile payments is anticipated from large players Apple and Facebook.

In the USA, alternative payment methods are expanding to rival debit and credit cards in both online and

offline retail. A digital currency trend also continues to evolve. The online retail payment market in the USA

grew by a small double-digit share in 2013, reaching several hundreds of EUR billion. M-Commerce payments

amounted to a medium-high double-digit figure in EUR billion, split almost evenly between tablets and mobile

phones. In Canada, online payment by card continued to be the leading method.

In Latin America, the number of internet users and potential shoppers that do not have credit cards has led to

substantial presence of alternative payment methods. Only in Brazil does the percentage of the adult

population with a relationship with a bank surpass 80%. The online and mobile payment markets in Brazil

grow, spurred by regulation, widening penetration and deployment of new technologies. Boleto Bancario was

the second most used payment method in Brazil, after bank credit card. In Argentina last year the payment

method most used by over 50% online shoppers was credit card, while cash payments upon receipt and such

services as Pago Facil and Rapi Pago also popular. In Mexico, the largest share of B2C E-Commerce sales is

generated through credit card payment, while the other popular method is cash on delivery.




Cards account for the largest share of B2C E-Commerce transactions in Europe, while digital wallets are in

second place. European Union legislators are working on improving the electronic payments regulations

considering such issues as security. In Germany, invoice remains the leading payment method in online

shopping, perceived as both the most secure and most convenient method. But other methods, such as

credit card and digital wallets, are on the rise. In Austria, the leading method both in M-Commerce and B2C E-

Commerce was credit card, while online shoppers in Switzerland most used invoice in online shopping and

credit card in mobile shopping.

Online payment is the largest contributor to card payment growth in the UK, with annual growth of over

10%. The use of contactless cards in on the rise: in early 2014, the monthly value of payments by

contactless cards in the UK exceeded a hundred GBP 100 million for the first time. In France, credit card

remains the most preferred payment method in B2C E-Commerce, followed by PayPal and similar services.

The year-on-year growth of online credit card payments in France slowed to a single-digit percentage in early

2014. Online card spending in Italy was growing year-on-year in every month of 2013, while in Spain, the two

payment methods most used in online shopping in 2013 were Bank Credit Card and PayPal.

Credit card was the most preferred payment method in both B2C E-Commerce and M-Commerce in Sweden,

though the share of online shoppers that prefer credit card decreased between 2012 and 2013. Card use

dominated payments in Denmark and Norway also in both B2C E-Commerce and M-Commerce, while in

Finland online bank transfer was ahead of cards.

Cash on delivery remains the dominant payment method in online shopping in Russia, though use of credit

cards and alternative payment is on the rise there. More than half of online shoppers prefer to pay on delivery

with cash, but a growing number now reaching nearly a quarter of shoppers prefers to pay with card either

online or upon delivery. Cash on delivery is also the most use method of payment in the Czech Republic.

Online shoppers in Turkey predominately use a credit card for purchases. E-Commerce transaction with cards

in Turkey reached a value of over EUR 10 billion. Also in Estonia B2C E-Commerce transactions with bank

cards are significant, with cross-border transactions by far outweighing the domestic ones.




Digital wallets had a substantial share on total B2C E-Commerce payments in the Asia-Pacific region, though

still behind credit and debit card. “Security“ and “Convenience of the Payment Method“ were among the top

decision factors in B2C E-Commerce for online shoppers in the region.

In Japan, payments in B2C E-Commerce are dominated by prepayment with a credit card, followed by cash or

card payments upon delivery in distant second. Over the counter payments for online purchases also are

popular. Though NFC payments arrived in Japan in 2013, contactless payment with cards is likely to continue

dominating this market segment. In South Korea, credit card payments are most common in E-Commerce,

while regulations are strict about security of such payments. In distant second, the payment method following

card payments was money transfer.

Mobile payments had a boom last year in China, with gross merchandise volume of third-party mobile payment

growing by around 7-8 times, sparked by mobile shopping. Still more growth is expected as competition

intensifies. The number of online payment users in China topped a quarter of a billion, while value of

payments increased by half. Alipay accounted for the largest share of the online payments market in China in

2013, while Tenpay was in second place. Alipay was also the largest player on the Chinese third-party

payment market, with its dominance even more evident than in online payments.

In other areas of Asia, the share of cash on delivery on B2C E-Commerce payments in India is forecasted to

decrease from 2013 to 2016, though still account for around a half of the market as credit card and mobile

payment increase there. In Indonesia, bank transfer was the most preferred payment method in B2C E-

Commerce last year, followed by cash on delivery.

Cash on delivery remains the major payment method in the growing B2C E-Commerce in the Middle East and

Africa. This method accounted for almost a half of E-Commerce transactions, while cards accounted for a third.

As of 2013, credit card was the online payment method most used in B2C E-Commerce in South Africa,

followed by bank transfer. The region’s leader in mobile payments, Kenya, generated a small double-digit

number in EUR billion of mobile payments in 2013.

For further information, see:

http://ystats.com/en/reports/preview.php?reportId=1081

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yStats.com has been committed to researching up-to-date, objective and demand-based data on markets and

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firm has a strong international focus and is specialized in secondary market research. In addition to offering

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and direct marketing, logistics, as well as banking and consulting.

http://ystats.com/en/reports/preview.php?reportId=1081

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Global Online Payment Methods: First Half 2014