By Christophe Bourbier, President of Limonetik.
Payment methods described as “alternative”, a real alternative to bank cards, are already everywhere: gift or prepaid cards, loyalty points, e-wallets, payments by mobile, etc. Their use is growing fast on the Internet and new ones are being created each day.
It’s in this context that the consultancy firm ADN’Co (a research company specialised in banking) has conducted a study to understand a bit more about the future of these alternative payment methods, and the results are surprising.
In 2015, in France, alternative payment methods should represent a potential of 13.8 billion euros, or roughly 25% of the online transactions in France in 2015. A strong growth brought about by the generalisation of e-business and the diversification of purchasing practices.
These “new generation” payment methods therefore represent one of the major progress levers for e-business in the years to come.
ADN’Co, which ensures it presents figures that are conservative overall, defines two main categories of alternative payment methods:
* The “Pure Plays”: they are specific to the Internet and to mobile use; for example PayPal but also iTunes, Moneybooker, and more recently Buyster or Kwixo; this category also includes payment solutions relying on mobile billing or ISP like Internet +, Zong, Boku, etc… Their share of transactions carried out online could double by 2015 and thus represent 9 billion euros, or 16% of the online trade.
* The “Offline renegades” blocked in the physical world up to now, such as payment facilities in stores, prepaid vouchers, or even loyalty points, wedding lists, etc. These alternative payment methods represent a potential market of 16 billion euros in France today and roughly 23 billion euros by 2015…. 20 % of which should switch from physical trade to e-business. That’s a market potential for e-traders of 4.8 billion euros by 2015, 6 times more than in 2011.
The ecosystems which gravitate around these payments are very dynamic, notably with the arrival of new players such as telecom operators or large Internet companies like Google and Facebook, for whom payment isn’t the heart of their service…
On the consumer side lots of changes are happening in terms of usage: consumers expect to be able to pay easily and securely, whether it’s from their computer, their mobile or their tablet; they also expect to be able to use their reserves of purchasing power, like holiday or restaurant vouchers, loyalty cards, wedding lists, etc. as they see fit, not only in certain stores or in the physical world.
For alternative payment methods there is a big challenge over the next few years: they must both represent a sufficient community of users to interest trading sites and at the same time already be available on a good amount of trading sites in order to interest their users. It’s the chicken and the egg conundrum! Shopping is open, competition is rife and often international. Only the biggest Payment Methods or those representing the most added-value for users will be long lasting.