Wednesday, 16 May 2012

WorldPay study reveals cultural differences in Alternative Payments

WorldPay, recently launched ‘Optimizing your Alternative Payments’, an in-depth global whitepaper and interactive heatmap of the alternative payments landscape, and the varying cultural preferences of payment types by geography.
According to WorldPay, the alternative payments (AP) market is growing at a phenomenal rate. It currently accounts for EUR165 billion of global eCommerce transactions around the world -- 22% of the total transactional value. It is estimated that there are currently over 230 AP schemes operating globally including: real-time bank transfer, offline credit transfer, direct debits, eWallets, paper-based payments and mobile payments.  Can it really only be 230? It seems that everyday (sometimes several times)  we are bombarded with the launch of one new life – enhancing life – changing product or another…
The AP market is expected to grow 13% by 2015 and within eCommerce, spend via alternative payments will outstrip that of card payment schemes. Growth rates of payment types vary; for example, eWallets currently lead the way with 36% of the market and this is expected to rise to 43%. Real-time bank transfers only make-up 12% of the AP types today but this figure is expected to rise to 20% in the next three years.
In the US, card payments dominate (17%). It is only due to the scale of the eCommerce market in the US,  that AP transactions comprise EUR46.6 billion of online spend. In other regions APs have a stronger share of the payments market.
Key country  findings from the Optimizing your Alternative payments whitepaper reveal that :

Germany - is a leading AP market globally. Currently 66% of eCommerce purchases (EUR45 billion) are made via alternative payment types. Online credit card penetration is low whilst managed offline credit transfers are popular. Elektronisches Lastschrift Verfahren (ELV), a form of direct debit payment, makes up a huge 28% of the market
India - Internet bank payments are the preferred choice when paying online. Prepaid cards and cash payments are also popular but mobile payments are gaining prominence due to the large number of mobile phone users in this region

China - Alipay dominates in China with 60% of the market share. Cash on delivery is also a
popular form of payment (20%). China UnionPay credit cards are also important for retailers entering the Chinese market. As a card scheme, it is already bigger than MasterCard and forecast to be bigger than Visa this time next year

Austria - Mobile payments are popular with Paybox supporting over five million users
Netherlands - Whilst the eCommerce market is relatively underdeveloped, two thirds of payments are made using alternatives (66%) -- the vast majority using iDEAL, a native real-time bank transfer

Phil McGriskin, Chief Product Officer, WorldPay, comments: "Cultural payment preferences have always existed but until fairly recently, online purchasing options were dominated by global card schemes. With the advances in technology, a new generation of  shoppers, and developing online economies, alternative payments are growing in popularity. This presents an opportunity in the eCommerce space for merchants to gain a competitive advantage by offering customers the option to pay using their preferred payment type. Merchants need to identify where their target customers are located and offer the relevant payment options to cater to cultural preferences. This will ultimately drive revenue for merchants, especially in new and developing economies."  
What are the factors driving AP in your market ? What USPs will payment schemes have to provide to   protect their hold in an ever changing landscape?view the
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