Page 30 - Pay Magazine s2014

28
pay world
The Future of E-Commerce Is Now
to 2019, alternative payment spending is projected to increase 4 percent in Latin America and
7 percent in North America. Before long, alternative payment methods could capture an even bigger share of the global e-commerce industry.
Digital Wallets Set to Surpass Credit Cards
In 2015, digital wallets were the
No. 1 global alternative payment method. By 2019, they are pro- jected to become the most widely used payment method of any kind. While credit card spending in the e-commerce market is expected to increase from $577 billion in 2014 to $603 billion in 2019, that pales in comparison to the predicted growth of digital wallets. Responsi- ble for $417 billion in e-commerce spending in 2014, digital wallets are projected to account for $668 billion in spending throughout 2019—easily the most of any payment method.
Many of the rst digital wallets were tied to retail giants, such as Alipay (Alibaba) and PayPal (eBay). Those were soon followed by bank and network wallets. Although these players helped raise awareness of digital wallets among customers, 2015’s newcomers like Apple Pay, Samsung Pay and Android Pay are transforming the industry despite little historic footprint in the pay- ments eld. The motivation behind their expansion into the payments space is simple: deliver the shop- ping experience of the future.
By integrating digital wallets into technology already used by
customers, these companies are providing consumers with a conve- nient payment method that will earn their loyalty.
As more digital wallets hit the market, competition for the atten- tion and loyalty of consumers will only intensify. Amid dozens of features o ered by new digital wallets, ve pillars will determine which ones survive:
1. Continued convenience:
Consumers rarely need to enter card details.
2. Reach: Wallet can be used in most places.
3. omnichannel: It’s available for use across numerous environments, including in-store, online and in-app.
4. Better security: Consumers do not feel concerned using it.
5. Customization and loyalty:
Delivery preferences and loyalty programs update automatically.
Cash on Delivery
Holding Steady
Many in the payments industry believe cash is dead. That, however, is far from the truth. In Taiwan, 19 percent of e-commerce payments are cash on delivery, trailing behind only credit cards and bank transfers. Some thriving economies also rely on cash. The e-commerce market in India is expected to quadruple over the next four years alone. The country also will become the largest SME market in the world, overtaking the U.S. by 2017.
While other payment methods could support expansion, consumer preferences do not change as quickly. Cash on delivery remains the most popular payment method in India. Merchants interested in delivering goods and services in India must employ cash on delivery as a premier payment channel, at least until alternative payment methods are more widely adopted.
Still though, merchants should exercise caution when implementing cash on delivery—even in markets where it’s popular. Cash is both market-speci c and fragmented and, in many cases, retailers choose to employ their own cash on delivery agent. Merchants considering establishing delivery and ful llment infrastructure should select a partner they trust to accept cash payments on their behalf.
Maturation Leads to New Mobile Markets
It’s no secret that smartphones have changed the way we pay. Since 2009, global mobile penetration has increased 39 percent. For mer- chants, the point of sale is no longer con ned to a cash register or desk- top. Both traditional and alternative payment methods can be used to make purchases on the go.
At the head of this shift in payments are technologically savvy countries with high mobile penetration and widespread Internet access. South Korea, Singapore, Hong Kong, the U.S. and the U.K. all drove growth
in m-commerce over the past six years. As these markets begin to