Gloomy economic conditions and curtailed consumer spending is forcing Javelin Strategy & Research to leap back from its previous five-year estimate on projected online transaction volume.  

In Javelin’s 2008 Online Retail Payments Forecast, the Pleasanton, CA-firm says that online transactions will account for just $268 billion, or 5.8 percent, of all retail spending by 2013. The economic crisis, which has led to a squeeze on consumer credit lines as well as discretionary spending, has forced a downward revision from the $355 billion online retail market Javelin saw last year in its crystal ball for 2012.  

That slowdown in growth will still mean an upsurge in the use of alternative non-card payment schemes. Among the fastest-rising trends lies with the online use of stored-value cards, which are expected to surge in transaction volume by 41.8 percent annually through 2013 to represent 13 percent of all Web retail payments. Last year, Javelin predicted just a 9 percent share for stored value in its five-year outlook.

The annual growth rate for credit-card usage online has been narrowed from an 11.7 percent CAGR last year to just 5.6 percent for 2013, as cards’ total volume share shrinks to 40 percent as other alt-payment methods like PayPal and BillMeLater further catch on with users.

“Many of the ‘alternatives’ for online retail transactions, including PayPal, BillMeLater, various ilks of prepaid and private label cards have reached the mainstream,” writes Bruce Cundiff, Javelin’s director of payments research, in his company blog. For banks, he says, the timing may be right to start angling in on the rising alternative methods, including NACHA’s Secure Vault Payments (SVP) program which directs users from Web merchant payment links to their bank Web sites to submit payments over the ACH rails. SVP is in the pilot stage.  

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