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An overview of alternative payments in the global marketplace

Alternative Payments Pick ‘n’ mix

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Alternative Payments Pick ‘n’ mix

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Your cards are nearing their expiry dateEurope represents the third largest eCommerce market in the world, with a B2C eCommerce turnover of £326 bn. Card payments have long dominated online transactions both domestically and when selling cross-border. Surprisingly however, less than half of all online shoppers in Europe own a credit card. In addition, many markets have popular payment cards types that are region specific, such as Carte Bleue in France, and so catering to different markets can be difficult. Therefore merchants need to ensure they are offering the right range of payment options for each market.

It pays to accommodate new alternative payment methodsThe use of alternative payments has grown at around 35% on average over the past few years. With this rapid growth, alternative payment methods within eCommerce are expected to surpass card payments in 2017, with a market share of 59% of online transactions.

Alternative payment solutions enhance the ability of merchants to maximise sales in a global marketplace, with some merchants having achieved a 12% uplift in conversion when providing 4+ payment methods in addition to credit cards.

With more than 300 alternative payment methods in operation around the world, it’s important to understand what alternatives are available, what to offer and where to offer them. The table below lists the types of alternative payment methods, their current vs. predicted value and global market share:

Type Bank transfers Direct debits eWallets Mobile Cash on delivery Other

About y Payment with immediate online authorisation via the customer’s bank

y Settlement is usually next-day

y Merchant initiates a money transfer from a shopper to itself

y Often used for regular, predicted payments

y Based on encryption software

y Can hold credit/debit cards, store cards, tickets and passes

y Two categories – direct carrier billing (collect money via the phone bill) and mobile-specific eWallets

y The mobile authenticates the shopper e.g. via fingerprint scanning

y Couriers collect payments when they deliver goods

y Payment is made to the shipping company, who then relays the payment to the seller

y Includes post-payment, invoices/ instalments, offline cash payment; cheque and digital currencies

Examples Giropay; iDeal; Nordea; SafetyPay; SOFORT

GoCardless MercadoPago; PayPal; V.me; WebMoney

Apple Pay; Ping.ping; SMS Billing

Merchant and delivery company specific

AfterPay; Billpay; Bitcoin; Klarna; Yapital

Value Current 2017 Prediction Current 2017

Prediction Current 2017 Prediction Current 2017

Prediction Current 2017 Prediction Current 2017

Prediction

£83 bn £166 bn £28 bn £37 bn £200 bn £1120 bn £12 bn £29 bn £63 bn £63 bn £111 bn £141 bn

Share of global payments market

7% 6% 2% 1% 17% 41% 1% 3% 5% 2% 10% 5%

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Percentage of alternative payment

transactionsGlobal e-transaction payment mix

EuropeCardseWalletsDirect DebitCash on deliveryBank transferOther

59%13%5%5%8%11%

US and CanadaCardseWalletsDirect DebitCash on deliveryBank transferOther

71%18%2%1%1%7%

South AmericaCardseWalletsDirect DebitCash on deliveryBank transferOther

47%10%4%8%13%10%

Africa and Middle EastCardseWalletsDirect DebitCash on deliveryBank transferOther

34%5%0%48%3%10%

Asia/PacificCardseWalletsDirect DebitCash on deliveryBank transferOther

37%23%1%11%14%14%

Europe

41%

US & Canada

29%

South America

53%

Africa & Middle East

66%

Asia Pacific

63%

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Alternative Payments Pick ‘n’ mix

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The key drivers of alternative paymentsThere are 2 payment types which will continue to transform the way consumers pay for goods – eWallets and mobile payments.

While a wide range of alternative payment methods continue to gain market share, eWallets are undoubtedly the leader. eWallet transactions are set to rise reaching a 41% market share by 2017. This growth is evident in sales figures – in 2012 alone, £200 billion was processed through eWallets. This is set to rise to £1,126 billion by 2017.

The leaders in the eWallet market are PayPal and AliPay. PayPal has a share of 57% within the global alternative payments market. A close second is AliPay, which remains the market leader in China and accounts for 30% of all its transactions. Another emerging player is Amazon Payments – with an impressive 215+ million active accounts, it is set to also become a success. Find out more about Amazon Payments in our article here.

Also in the running are established card payment leaders such as Visa and MasterCard. Both vendors are now trying to get a foothold in the nascent market, with their solutions V.me and MasterPass.

There will be over 2 billion smartphone users in 2016 – This will represent over a quarter of the global population.

Mobile payments is one of the biggest revolutions in eCommerce expansion. Consumers are using them for banking, online shopping and, increasingly, making purchases at in-store checkouts.

As expected, PayPal is the market leader in mobile payments, accounting for a 78% market share. This is unsurprising due to PayPal’s strong competitive stance with the global eWallets market. The mobile payments market is also seeing new players, such as Apple Pay which was launched in October 2014. Apple Pay is steadily gaining traction in the mobile payments market, with a market share of 1.7%. Apple CEO, Tim Cook spoke of Apple Pay’s early success: ‘more than 1 million cards were activated on Apple Pay within the first 72 hours of its launch’.

With consumers now becoming familiar with using eWallets and mobile payments, we are experiencing a period of aggressive growth within those markets, with providers scrambling for a piece of the alternative payments pie.

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Alternative Payments Pick ‘n’ mix

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Insight into a range of alternative payment methodsWith over 300 alternative payment options and new options, understanding which methods you should consider can seem to be an overwhelming task. Beyond that, understanding the relative ease or difficultly of adding new alternative payment methods can be prohibitive for busy eCommerce teams.

The table below provides an overview of alternative payment methods, ranging from the veterans in the alternative payments market, to the up-and-coming and newly established.

Payment method

Category Country head office

Popular market/s

Short description Client examples

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Amazon Payments eWallet US US; UK With Amazon Payments, consumers can login and pay using their saved Amazon details.

All Saints; Secretsales.com; Party Delights; BHS Direct; Bench; Boxfresh

Bitcoin Other (Crypto-currency)

US UK; Italy; US; Finland; Australia; Singapore; Netherlands; Canada

Bitcoin is a virtual currency that allows people to buy goods and services over the Internet. Like all currencies, Bitcoin can be converted into other currencies.

Microsoft; Dell; Newegg; TigerDirect; Monoprix; Bitcoinshop.us; Honest Brew; Libertystore.de; Schuhwelt

GoCardless Direct Debit UK UK GoCardless provides an easy way of setting up and managing/maintaining direct debits online.

Bluesky Business’ Rock Choir; Greater Anglia; Crowdcube; Spencer Hockey Club

MasterPass eWallet US UK; US; Canada; Australia; Italy

MasterPass is a eWallet for all MasterCard, debit and Maestro cards.

Rakuten.com; Newegg; TigerDirect; Lenovo; J Crew; Jack Threads; Movietickets.com

PayPal eWallet US Global Customers login and pay via their PayPal account. PayPal takes the payment from customers card or bank directly.

eBay; ASOS; Topshop; Zara; John Lewis; Lakeland; Nike; Kiddicare; Groupon; Anthropologie; Disney Store; Boots

Skrill Wallet eWallet UK Global Skrill Wallet takes the payment from your card or bank directly.

Skype; Bet365; Ebay; Williams Hill; Instaforex; Thomas Cook

SMS Billing Other (Carrier billing) (Many providers) Global Reverse SMS billing means that the user of the phone, rather than the message sender, is charged for the cost of the SMS.

Oxfam; British Red Cross; Bonusslot.co.uk

V.me by Visa eWallet UK UK; France; Belgium Make online payments with Visa and other major card brands. Payment and shipping preferences are stored in a V.me account

Aquarelle; Made.com; Universal Music; Brand Alley; Currys; Clarks; Wagamama; Dune

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Alternative Payments Pick ‘n’ mix

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Payment method

Category Country head office

Popular market/s

Short description Client examples

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AcceptEmail Other (Email bill payment)

Netherlands Netherlands AcceptEmail sends bills directly to your inbox on your computer, tablet or mobile and can be paid for via an email link.

BMW; Dell; T Mobile; Vodafone; Telfort; Vattenfall; Thomas Cook; Ticket Master

AfterPay Other (Invoice) Netherlands Netherlands; Belgium; Luxembourg

AfterPay is a post-payment, invoice service. It is most popular in the Benelux regions.

Horloges.nl; Omoda; G Star Raw; McGregor; Tommy; Trendymeubels.nl

BarPay Other (Offline cash payment)

Germany Germany With BarPay, consumers are sent a barcode via email or cash code via text message which they then print or submit via smartphone.

Reisenthel; Rakuten; Birkenstock; Springlane; Reisenthel; Tausenkind; Schiesser; Meinfoto; Lekkerland

Billink Other (Invoice) Netherlands Netherlands; Germany Billink is an invoice-based payment solution and suits both B2B and B2C. It is most prevalent in the Netherlands.

Yante Bep; Gave Actie; AlleKabels; InktWev.nl; Mud Masters Obstacle Run

BIllpay Other (Invoice/ Instalment)

Germany Germany; Austria; Switzerland; Netherlands

Billpay is a payment solution that enables shoppers to buy now and pay later. Billpay handles the management of funds with the customer.

Enamora; Jades24; Fashionforhome; Apotheke; Wunderkarten; Apo-discounter; Esprit; Runners Point

BillSAFE Other (Invoice) Germany Germany; Austria BillSAFE allows merchants to invoice consumers so that they can shop and pay later. BillSAFE is a PayPal company.

ATU; Euronics; Schuster; Arktis.de; Zaun24.de; Herrlicher; Medion; Kiveda

Giropay Bank transfer Germany Germany Giropay is a popular German payment method that allows shoppers to pay online via bank transfer.

Globetrotter; Noppies; PlayStation; Banggood; Skype

iDEAL Bank transfer Netherlands Netherlands iDeal allows customers to buy on the Internet using direct online transfers from their bank account. iDeal is very popular amongst Dutch consumers.

Zalando; Hugo Boss; Wehkamp; Gant; De Bijenkorf; Lufthansa

Klarna Other (Invoice/ Instalment)

Sweden Germany; Sweden; Finland; Norway; Denmark; Austria

Klarna makes online buying simple and safe, especially on mobile. Combined with a buy now and pay later option they help increase sales for retailers. Klarna is the fastest growing payment solution in Northern Europe.

ASOS; Spotify; Wiggle; M&M Direct; IBM; Pimkie

Nordea Bank transfer Denmark Sweden; Finland; Denmark; Norway

Nordea enables their customers to use online banking to complete online purchases. Consumers are redirected to their bank to initiate a bank transfer. Nordea is very popular in the Nordics.

Suomikauppa.fi; William Hill; Tiketti.fi

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Alternative Payments Pick ‘n’ mix

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Payment method

Category Country head office

Popular market/s

Short description Client examples

Popu

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PayByBill Other (Invoice) Norway Norway; Sweden; Denmark; Finland; Germany; Netherlands

PayByBill allows consumers to pay after delivery of the goods. PayByBill settles with the company and then sends an invoice to the customer

Bokus.com; Fotovideo; Stormberg; Toys 'r' us; XXL Sport

Ping.ping Other (Carrier billing) Belgium Belgium; Luxembourg; France; Netherlands

Ping.ping is an electronic micropayment system which allows users to make purchases via their mobile phone.

BIB Hoeilaart; Fleet Wash; Coca-Cola (vending machines only)

SafetyPay Bank transfer US Austria; Germany; Netherlands; US; Brazil; Canada; Colombia; Costa Rica; Peru; Mexico;

SafetyPay enables shoppers to make online purchases and pay directly through their local bank account in the currency of choice.

Volaris; Skype; Zotter

SOFORT Bank transfer Germany Austria; Belgium; Germany; Switzerland; Netherlands; Spain; Poland

Highly popular German payment method, SOFORT enables consumers to pay using their online bank account.

Ikea; Esprit; Conrad; Flyeralarm; Media Markt; Printcarrier.com; Obi; STA Travel; Bonprix

Yapital Other (Invoice) Germany Germany; Luxembourg Yapital is a cashless cross-channel payment solution, offering in-store, mobile, online and invoice payment. Yapital is popular amongst German consumers

Otto; Baur; Douglas; Rakuten; Gortz; Limango

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Apple Pay Mobile eWallet US US Apple Pay is a mobile payment service that lets iPhone devices make payments at retail and online checkout. It digitises the card’s magnetic stripe card transaction at terminals.

Apple; Bloomingdales; Babies 'r' us; American Eagle Outfitters; Subway; Nike; Sephora

eCheck (ACH) Other (Cheque) US US eCheck is an online cheque payment that can be processed in fewer steps than a regular cheque

Walmart; Dell; Amazon

FuturePay Other (Invoice/ instalment)

US US FuturePay allows shoppers to put purchases on a FuturePay 'tab,' (buy now and pay later).

Ultimo Fashions; Suit Den; International Beauty; Global Trucker; Body and Fitness

PayNearMe Other (Offline cash payment)

US US PayNearMe sends shoppers a barcode via email which they then print or submit via smartphone at over 18,000 locations across retail stores and service stations

Herbalife; Spotify; Greyhound; Blackhawk Finance; Family Dollar; Ace Cash Express; 7-Eleven

WU (Western Union) Pay

Offline cash/ online bank transfer

US US WU Pay allows shoppers in the U.S. to pay for online purchases from their existing bank accounts or in cash at Western Union Agent locations.

Sears; Kmart; TigerDirect.com; Lightinthebox.com; Miniinthebox.com; Jolly Chic

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Alternative Payments Pick ‘n’ mix

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www.crossborder-ecommerce.com ‘Trends in alternative payment methods around the globe’ (June, 2014)Alternativepaymentsfaq.comAlternativepayments.com ‘Cut up your credit card’ infographic

Worldpayglobal.com ‘Your global guide to alternative payments (2014)Ecommerce-europe.eu ‘With a turnover of $567.3 billion, Asia-Pacific is the largest e-commerce region in the world’ (February, 2015)Cleverbridge.com ‘E-commerce Eye Candy – Alternative

Payment Methods’ (June, 2014)Worldpay.com – ‘E-wallets to rival cards as world’s most popular payment type by 2017’ (January 2014Tom Taylor, Vice President, Amazon Payments – Press release (October, 2013)

Thetelegraph.co.uk ‘Quarter of the world will be using smartphones in 2016 (December, 2014) Marketwatch.com ‘What do people buy with their iPhones? Big Macs and drugs’ (December, 2014)WSJ.com, ‘Apple CEO Tim Cook Happy With New Apple Pay Service’ (October, 2014)

Payment method

Category Country head office

Popular market/s

Short description Client examples

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Alipay eWallet/ Invoice/ Bank transfer

China China; Hong Kong; Taiwan

Alipay offers an escrow payment service, which is used to reduce transaction risk for online consumers. Shoppers can review products they have purchased before releasing funds to the seller.

Macy's; Bloomingdales; Neiman Marcus; Tmall; Alibaba; Air Asia; iHerb.com

MercadoPago eWallet S.America Argentina; Brazil; Chile; Colombia; Mexico; Venezuela

MercadoPago is a popular eWallet option in South America that enables payment through international and local payment cards.

Alibaba; Mercadolibre.com

POLi Payments Bank transfer Australia Australia; New Zealand POLi (Pay On Line) enables consumers to pay online from their Internet banking without the need for card details

Skype; Bet365; William Hill; Virgin Australia; Air Asia; Scoot; Etihad Airways

PostPay Bank transfer Australia Australia PostPay offers an escrow payment service used to reduce transaction risk for online consumers; shoppers have the ability to verify whether they are happy with goods before releasing funds to the seller

Autoelec; Real Smart

WebMoney Transfer eWallet Russia Russia WebMoney is an eWallet that allows shoppers to transfer money via money order, wire transfer and does not require a card or bank account.

Ozon.ru; Emirates; Tinydeal.com; Coolicool.com; Supermerkado

Yandex.Money eWallet/ Carrier billing/ offline cash payment

Russia Russia Launched by Yandex, the leading search engine in Russia. Yandex.Money accepts payments online from bank cards, eWallets, mobile phone balances and in cash via payment kiosks.

Ozon.ru; Skype; Alibaba; Apple; Nintendo;

eCommera will regularly be carrying out deep-dive analysis and review of alternative payment methods in the market – you can view our first instalment, Amazon Payments here.

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