Key trends in the global electronic payment market. Part 2
In the previous part of the study of the global market of electronic payments, we presented statistical and forecast data on e-commerce markets in various regions of the world. In today's issue we will talk about alternative online payment methods that may take leading positions in the global payment market in the near future, tell you what a modern consumer is expecting from a payment instrument, using JCB as an example, why success in the domestic market does not guarantee success in the global arena and also dwell on the Russian e-commerce market. What alternative payment methods do Russians prefer, what volumes has the Russian e-commerce market reached, what is waiting for it and other markets in the coming years? All this and much more can be found in the second part of the Worldpay study “Trends in the global payment market”. Translation and adaptation studies made specifically for the corporate blog PayOnline , the system for receiving and processing online payments.
Definitions of payment methods
ASO . Alternative means payment methods that do not require the direct use of plastic or virtual cards based on global payment systems, such as Visa, MasterCard or American Express.
Real-Time Bank Transfers (real-time bank transfer). Customers pay for goods using the online banking service. During payment, they are either redirected to the payment page of their bank, or they choose their bank in the list of service provider or seller of goods. Payment authorization in most cases occurs instantly. Examples: iDeal , Sofort Banking , eNets, Przelewy24 , Safetypay .
Offline Bank Transfers (bank transfer with an auxiliary code). During the payment process, customers receive an auxiliary code. Knowing it, they can enter the online banking service at any convenient time and complete the payment operation with it. Payment authorization occurs only at the time of completion of the operation. Examples: Dineromail , SafetyPay .
Cash on Delivery (cash on delivery). Payment for goods is made at the time of delivery. The popularity of the method is growing in India and some countries of Southeast Asia. However, due to the local specifics of different countries and sellers, cash on delivery as a method of payment is not suitable for each of them. Its disadvantage is also the impossibility of delivery to other countries and regions, therefore, growth on a global scale is out of the question. Examples: There is a typical delivery method for many vendors and delivery services.
Direct Debits . It is used in cases when the client is required to pay regularly, with a certain frequency. This method is well suited for predictable payments, such as utility bills or subscriptions to goods or services. The customer can usually make a refund.
Examples: SEPA DD , ELV .
EInvoices (accounts). Using invoices allows customers to pay for goods upon delivery. You can pay for the purchase both at the time of order confirmation, and within a few weeks thereafter. For the buyer, the process is very simple: he just needs to enter the email address and the postal code of the recipient. However, to avoid entering the details of a bank account or card will not work, because in the end, the payment is made with their help.
Examples: Klarna , AfterPay .
eWallets (e-wallets). Simple, convenient and secure payment method, which is becoming increasingly popular in the market. Payment for purchases can be made using the amount available on the account of the wallet, as well as using other sources of funds associated with it. Examples: Alipay , Tenpay , PayPal , Qiwi , Yandex.Money .
PostPay (postpay). The customer chooses the product in the online store and pays for it after placing the order in stores, retail outlets, bank branches or other places in the affiliate program. The delay between order confirmation and actual payment makes this method inconvenient for selling a number of product categories.
Examples: Konbini, Boleto Bancario .
PrePay (prepay services). To purchase, a customer must purchase a PrePay card or voucher calculated for a certain amount. Cards and vouchers are marked with a PIN code and contain a small amount of funds (from $ 5 to $ 100). They can be formed, forming a total balance on the account. To make a payment, the cardholder only needs to enter a PIN code when paying for the goods. Examples: paysafecard , NeoSurf .
Pre-Paid Cards (prepaid card). Pre-Paid cards work on the basis of payment systems such as Visa or MasterCard. Just as in the case of debit and credit cards, Pre-paid cards allow you to make purchases or withdraw cash, but without the ability to exceed the amount available on the card at the time of the transaction. The key difference from a debit card is that the Pre-paid card is not tied to a customer’s bank or deposit account. It also lacks many other benefits that debit card holders receive. Banks often offer such cards to young people, customers who do not use other banking services and have bad credit history.
Debit Cards (debit cards). When making a payment using a debit card, the funds are debited from the personal bank account to which it is linked. If the amount of the debited amount exceeds the funds available in the account, the operation is canceled. However, unlike the Pre-paid card, the bank may allow the holder to exceed the card limit (overdraft). Also called an asset card in the United States or a payment card in the UK.
Credit Cards (credit cards). The credit card holder gets the right to use a certain amount of funds given to him by a credit card issuer. The client undertakes to return part of the amount spent together with the interest and other possible commissions within the same accounting period (30 days). The rest of the debt can be paid immediately or after a time, at the request of the client. In the latter case, the payment of the balance is transferred to the next billing period. The issuer can be either a bank or a store or service provider (for example, an airline).
Charge Cards (payment card). A variety of credit card. The difference is that in the case of Charge Cards, all debts (the sum of all payments made) must be repaid within one billing period (30 days) without transferring any part of it to the next period. Example: most American Express cards.
Other payment methods . This includes methods of payment for services using a mobile number, cryptocurrency and other young and promising technologies. Examples: Bitcoin, Zong , BOKU .
Real-Time Bank Transfers (real-time bank transfer). Customers pay for goods using the online banking service. During payment, they are either redirected to the payment page of their bank, or they choose their bank in the list of service provider or seller of goods. Payment authorization in most cases occurs instantly. Examples: iDeal , Sofort Banking , eNets, Przelewy24 , Safetypay .
Offline Bank Transfers (bank transfer with an auxiliary code). During the payment process, customers receive an auxiliary code. Knowing it, they can enter the online banking service at any convenient time and complete the payment operation with it. Payment authorization occurs only at the time of completion of the operation. Examples: Dineromail , SafetyPay .
Bank transfers account for $ 212 billion or 11.1% of the e-commerce market in 2014. The segment size by 2019 is estimated at $ 283 billion / 11.7% of the market.
Cash on Delivery (cash on delivery). Payment for goods is made at the time of delivery. The popularity of the method is growing in India and some countries of Southeast Asia. However, due to the local specifics of different countries and sellers, cash on delivery as a method of payment is not suitable for each of them. Its disadvantage is also the impossibility of delivery to other countries and regions, therefore, growth on a global scale is out of the question. Examples: There is a typical delivery method for many vendors and delivery services.
The size of this segment at the end of 2014 amounted to $ 124 billion or 6.5% of the e-commerce market. The forecast value for 2019 is $ 165 billion / 6.8%.
Direct Debits . It is used in cases when the client is required to pay regularly, with a certain frequency. This method is well suited for predictable payments, such as utility bills or subscriptions to goods or services. The customer can usually make a refund.
Examples: SEPA DD , ELV .
The segment size in 2014 is $ 5 billion, which corresponds to 0.3% of the total e-commerce market, and about $ 13 billion / 0.6% by 2019 (the forecast value).
EInvoices (accounts). Using invoices allows customers to pay for goods upon delivery. You can pay for the purchase both at the time of order confirmation, and within a few weeks thereafter. For the buyer, the process is very simple: he just needs to enter the email address and the postal code of the recipient. However, to avoid entering the details of a bank account or card will not work, because in the end, the payment is made with their help.
Examples: Klarna , AfterPay .
At the end of 2014, the size of this segment was $ 3 billion, the percentage of the e-commerce market was 0.1%. By 2019, the market share could reach $ 8 billion / 0.3%.
eWallets (e-wallets). Simple, convenient and secure payment method, which is becoming increasingly popular in the market. Payment for purchases can be made using the amount available on the account of the wallet, as well as using other sources of funds associated with it. Examples: Alipay , Tenpay , PayPal , Qiwi , Yandex.Money .
According to the results of 2014, the market share is one of the most significant - 21.7% or $ 417 billion. According to forecasts, in 2019 e-wallets will occupy a leading position in the e-commerce market, their share will be 27.6%, and the total amount - $ 668 billion.
PostPay (postpay). The customer chooses the product in the online store and pays for it after placing the order in stores, retail outlets, bank branches or other places in the affiliate program. The delay between order confirmation and actual payment makes this method inconvenient for selling a number of product categories.
Examples: Konbini, Boleto Bancario .
This segment owns 0.9% of the payments market, which corresponds to $ 18 billion (2014). By 2019, a slight increase is possible to $ 25 billion / 1.0%.
PrePay (prepay services). To purchase, a customer must purchase a PrePay card or voucher calculated for a certain amount. Cards and vouchers are marked with a PIN code and contain a small amount of funds (from $ 5 to $ 100). They can be formed, forming a total balance on the account. To make a payment, the cardholder only needs to enter a PIN code when paying for the goods. Examples: paysafecard , NeoSurf .
The segment size is $ 55 billion, the percentage of the e-commerce market is 2.9% (2014). By 2019, the share of prepaid services will be $ 122 billion / 5.0% (predicted value).
Pre-Paid Cards (prepaid card). Pre-Paid cards work on the basis of payment systems such as Visa or MasterCard. Just as in the case of debit and credit cards, Pre-paid cards allow you to make purchases or withdraw cash, but without the ability to exceed the amount available on the card at the time of the transaction. The key difference from a debit card is that the Pre-paid card is not tied to a customer’s bank or deposit account. It also lacks many other benefits that debit card holders receive. Banks often offer such cards to young people, customers who do not use other banking services and have bad credit history.
Segment size in 2014 - $ 45 billion, the percentage of the e-commerce market - 2.4%. In 2019, a slight decrease in the size of this segment is expected, to $ 43 billion / 1.8%.
Debit Cards (debit cards). When making a payment using a debit card, the funds are debited from the personal bank account to which it is linked. If the amount of the debited amount exceeds the funds available in the account, the operation is canceled. However, unlike the Pre-paid card, the bank may allow the holder to exceed the card limit (overdraft). Also called an asset card in the United States or a payment card in the UK.
The volume of payment transactions on debit cards in 2014 amounted to $ 387 or 20.1% of the total payments. Thus, debit cards ranked third in the ranking of the most popular payment methods. However, by 2019, their market share will drop to 17.2%, despite the fact that in dollar terms, the segment will reach $ 416 billion.
Credit Cards (credit cards). The credit card holder gets the right to use a certain amount of funds given to him by a credit card issuer. The client undertakes to return part of the amount spent together with the interest and other possible commissions within the same accounting period (30 days). The rest of the debt can be paid immediately or after a time, at the request of the client. In the latter case, the payment of the balance is transferred to the next billing period. The issuer can be either a bank or a store or service provider (for example, an airline).
The segment size at the end of 2014 was $ 577 billion. The share in the e-commerce market is 29.9%, the largest among other payment instruments. According to forecasts, by 2019 credit cards will give way to e-wallets and will occupy 24.9% of the e-commerce market, the total amount of payments on credit cards will reach $ 603 billion.
Charge Cards (payment card). A variety of credit card. The difference is that in the case of Charge Cards, all debts (the sum of all payments made) must be repaid within one billing period (30 days) without transferring any part of it to the next period. Example: most American Express cards.
The segment size at the end of 2014 was $ 59 billion, the share of the e-commerce market was 3.1%. By 2019, the volume of payments on settlement cards and their percentage share in the market will decrease to $ 57 billion / 2.3%.
Other payment methods . This includes methods of payment for services using a mobile number, cryptocurrency and other young and promising technologies. Examples: Bitcoin, Zong , BOKU .
The segment size at the end of 2014 amounted to $ 20 billion / 1.0% of the payments market. By 2019, its share may be slightly reduced - to $ 19 billion / 0.9%.
')
Likely contenders for the palm in the coming years:
Alipay In the next few years, the Chinese market expects growth, and Alipay, being the most popular payment service in the country, will benefit from it. In addition, the payment giant is also expanding its activities in the international market, focusing on Europe and the United States.
Tenpay As a result of the latest innovations, the payment service is steadily increasing its share in the Chinese market.
MasterPass . Due to the company's new approach to selective presence in certain segments of the Chinese market, especially those where PayPal has no dominant influence, the company has every chance of winning a significant market share.
UnionPay . The quality of electronic services of the company is growing with the growing understanding of the specifics of electronic commerce. The company's strong position in the organization of so-called payments with the presence of the cardholder in the Chinese payment market should help it succeed.
Prepaid services . At the moment, markets with a high proportion of prepaid vouchers are flourishing. At the same time, in many economies, where lending is one of the main growth factors, consumers have begun to opt for control over personal finances more often. This makes prepayment and related methods more preferable in countries where buying on credit is a historical norm. In general, the golden age of lending for such markets is coming to an end, giving way to debit transactions and methods based on prepayment. Consumers no longer want to burden themselves with debts: they are highly aware of the detrimental effects of loans and change their buying behavior accordingly.
It is also worth mentioning that other e-wallets, such as Apple Pay, Samsung Pay and Android Pay, are also likely to increase their market shares in the future. However, due to the small time of the presence of these services on the market, we now do not have data that could support this statement.
Who will win the war of electronic wallets?
The modern consumer has an unprecedentedly wide choice, while at the same time having a good understanding of their needs. The winners in the coming war of digital wallets will be those services that will be able to provide the best quality of services, based on:
- Convenience - no need to regularly enter card details.
- Wide coverage / scale - availability of a payment method from the most different places.
- Universal interaction channel - the ability to use e-wallet in different environments, for example, in the store, online and in the application.
- Guaranteed security - consumers still feel vulnerable when making cardless payments.
- Individual approach - loyalty programs and delivery preferences should be updated automatically, in real time.
E-wallets will be ahead of credit cards by 2019
To adapt or become obsolete
Looking at the many payment methods available around the world, it becomes obvious that the same approach to different markets will not be successful. Regional cultural nuances that affect payment preferences around the world will not lose their relevance in the foreseeable future. It is also true that consumers are no longer tied to the classic methods of payment and the traditional credit offers that were common in the past. As an example, JCB. Being a very strong trademark, the Japanese card payment system has dominated the domestic market for many years, especially with regard to intra-store purchases. Nevertheless, the company's international reach is limited, and this fact has become much more important as the era of e-commerce begins, when consumers get the opportunity to make purchases outside their own country.
And although these changes did not affect adult JCB users, the company cannot ignore the desire of a growing number of its young customers who want to travel and pay for goods and services outside of Japan. This group of consumers is increasingly giving its preference to international payment systems, rather than JCB, which enjoys a much lower level of continuity around the world than Visa and MasterCard. The result of this dynamic is a growing mismatch between the company's shares in traditional retail and online markets. Now JCB needs to solve the difficult task of attracting young Japanese consumers. To this end, the company is engaged in expanding the coverage of the international retail network.
Another example of adaptation is Malaysia, where e-commerce is now growing, due to the fact that a growing middle class consumers are discovering new payment methods. Currently, the most popular payment method is payment cards, which account for 75% of all payments. Nevertheless, it is likely that their share will drastically decrease over the next few years, mainly due to the increased availability of traditionally more acceptable payment methods, such as bank transfers and e-wallets. However, this does not mean that any changes will occur in the consumer culture. It will rather indicate the adaptation of companies to the consumer preferences of the new group of more affluent and technically savvy consumers.
The continuity of innovation that meets the needs of current and future consumers is essential for any method of payment. The purchasing power of young generations grows as they mature, and as soon as they develop their own payment preferences, it becomes very difficult to change them.
The share of bank transfers among other electronic payment methods in Malaysia
According to the materials of the Worldpay study. Subscribe to our corporate blog, there is still a lot of interesting things ahead. And if you need to organize the reception of payments on the website or in the mobile application, please contact our specialists to answer any questions and help you connect the most favorable tariff.
Source: https://habr.com/ru/post/391957/
All Articles