Despite consumer interest in alternative online payment products, credit cards still dominate the online-payments space. And they likely will continue to do so until merchants promote a broader array of alternative payment methods, according to Javelin Strategy and Research.
The company, in conjunction with Internet retail association Shop.org, surveyed 60 U.S.-based merchants in July and August that had an online presence and found that most accept credit cards online, but there was little support for alternative payment options, Beth Robertson, Javelin director of payments research, tells PaymentsSource.
Among the merchants studied, 77% of their customers paid online with a credit card, while only 6% paid with an alternative payment option, such as PayPal, Javelin found (see chart).
“The majority of retailers surveyed offered PayPal but not other alternatives, so there is still a disparity in terms of the mix of payment offerings available versus what consumers might want to use,” Robertson says. “We are encouraging merchants to offer a wider array of payment alternatives because it will bring in new customers.”
Going forward, merchants should expand their payment options because consumers are using credit cards less and may feel alternative payments are safer online, Robertson says.
In fact, according to the results of a separate Javelin consumer survey involving 5,000 U.S. adults in 2010, 40% of respondents said they preferred to use credit cards online, 29% preferred debit cards, 6% preferred prepaid or gift cards, and 17% preferred to use alternative-payment options.
The primary reason merchants do not offer more payment options has a lot to do with PayPal being the only recognizable brand. Other alternatives still are in the throes of developing greater brand recognition, Robertson says
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