Online payments made using mobile devices continues to rise globally, now accounting for 27.2% of the total online payments made in Q1 2015. This figure is up from 25.8% on the traditionally high online spending period of Q4 and up a massive 39% on the corresponding period last year, according to Adyen’s quarterly Mobile Payments Index (MPI), which tracks mobile payment data from web-based transactions across Adyen’s customer base. [Read more…]
Research and Markets has released a new report on Alternative Payment Channels, which have changed the way consumers pay for goods and services and have paved the way for tapping into the unbanked sector across the world.
The report gives detailed insight into the huge variety of alternative payment channels currently available, and is a must for all industry stakeholders.
Key industry statistics have been compiled to give a holistic view of the major markets such as the US, UK, Italy, Germany, India and China, with a special emphasis on the opportunities available in emerging markets.
The report is largely structured into four major sections:
The alternative payment channels market: The most commonly adopted modes of payment and the emerging and niche payment channels. Further, the section also entails a detailed coverage of key drivers of alternative payments and its contribution towards financial inclusion of the unbanked sector.
Technology and infrastructure: The technological and infrastructural developments driving the innovation within the alternative payment market.
Developed markets overview: Coverage of the positioning of alternative payment channels in the developed regions, especially North America and Europe.
Emerging and developing economies: Insights pertaining to market potential/ opportunities and the growth of alternative payments. The section lays particular emphasis on the consumer spending habits regarding payment methods.
Read this report to:
- Gauge the current market status of alternative payment channels
- Access previously unpublished data on the alternative payments market
- Identify the trends and innovations propelling the growth of alternative payments
- Gain insight into technology and infrastructure supporting electronic payments
- Scan the trends in developed markets and the opportunities in the emerging markets
- Learn from the major players and their product portfolios
- Analyse the overall market potential for alternative payments
The global payments market continues to evolve to a large extent due to the boom in ecommerce and in the mobile payments market. While traditional payment methods have evolved over a long period of time, developed and emerging economies are increasingly adopting alternative payment methods, which promise to provide the consumers with the ability to undertake low cost transaction in a safe and convenient way. New and innovative payment services have become faster, cheaper, more secure and practical, and better integrated to customer systems and processes.
Changing consumer spending habits and preferences, growing awareness among consumers regarding the different payment instruments available and the constant development of technology are the key factors driving the growth of alternative payments. Payments are moving from cash based to cash-less transactions, to customer not present transactions. While online payment services or e-commerce are more prominent in developed economies owing to the high penetration of internet, mobile payments have a considerable reach in emerging economies like India, China, Brazil, Kenya, etc as there are more mobile phones than bank accounts in these countries. According to the Bank of Finland’s Payment Habits and Trends Report, trends in the EU worth highlighting include the following:
- non-cash payments are replacing cash payments
- electronic payments are replacing paper-based payments
- self-service is replacing branch banking
- use of debit cards has grown faster than use of credit cards, but this may change
- direct debits are developing slowly
These changing trends are creating opportunities for established as well as start up companies offering a plethora of alternative payment instruments. Companies like PayPal, Alipay and Google Checkout are facing severe competition from new entrants like Boku, Inkfruit, Giropay, Obopay, Zong, Gaia (a gaming and social networking site) etc. New entrants are coming up with innovative, convenient and cost effective payment options, for example Boku which offers its customers the ability to buy digital goods and services using their mobile number, and where the charge shows up in the mobile bill (either a pre-paid or monthly bill). Even banks are focusing their efforts on promoting internet and mobile banking to keep up with the competition, and retain their market share. The online and mobile payment market is expected to undergo substantial growth with even some government institutions supporting the development of alternative payment channels across various sectors.
Additionally, innovation in technology has paved way for greater competition from non bank payment service providers. The alternative payment services and technologies offered by these companies will allow consumers to make online purchases, buy virtual goods and currencies, and make personal and commercial payments etc. Though a large number of payments are still made by cash and cards, a sizable number of payments made online are via alternative payment instruments.
Payments habits are largely influenced by a country’s social-economic and technical factors. So the developed markets represent a well established consumer based for e-commerce. Among developed countries Japan is the most mature market for mobile payments, while Europe is exploring the benefits of e-commerce with SEPA promoting the use of online banking in EU regions. The US market is quite structured and mature for alternative payments but the use of mobile payments is still at nascent stage. By contrast mobile payments is forecast to grow at a slower pace in the US, as introducing mobile payments require a considerable investment in infrastructure. Here the ratio of benefits to costs is extremely low in the short run. Not only is the payment market more mature in developed economies, but the percentage of unbanked or under-banked section is also quite low.
Emerging economies represent a great opportunity for mobile payments, largely due to a much higher proportion of mobile phone ownership compared with bank accounts. Among the BRIC nations Russia is way ahead with regards to e-payments, reaching an 84% penetration level by 2002. In India the retail sector is still dominated by cash transactions, but consumers are gradually moving towards cashless transactions. Banks in India are doing their best to promote mobile banking in urban as well as rural areas. With an aim to promote cashless transactions the government there is launching some major programmes like UFID, a voucher schemes for public distribution stores. Another factor for growth of e-payment in India is increased internet subscription and access to computers on a daily basis. The internet subscriber base in India has reached 16.2 mn in 2010, a year on year growth of 19.5%. One of the bottlenecks for growth of alternative payments is China, and the contrast here between the low internet penetration rate in rural China which stands at 5.1% against 21.6% in urban areas. However, the mobile penetration rate in China is high which suggests a strong foundation for the growth of mobile payments as an alternative means of payment.
Developments in IT are another major factor driving the growth of payments channels. The growth of near-field communication technology (NFC) provides completely new interfacing possibilities, with the bandwidth of long distance wireless communication fulfilling any payment service needed at a very low cost.
Several new and important technological developments in the areas of internet and mobile banking integration, customer interfaces, and providing e-invoicing support and increased data content are under consideration or in the development stage.
Additionally, a number of companies are coming out with new and improved mobile handsets, which have all the features necessary to become the physical payment instruments of the future, and which can deliver innovative services such as e-ticketing.
With these developments will come the necessity for the standardisation of alternative payment channels and the demand to improve cross border payments processes and services. Innovative payment solutions coupled with changing consumer preferences, and the introduction of favourable payment laws are expected to drive the market for alternative payments globally.
For more information or to purchase the report, please visit: Research and Markets