The verdict is out. Credit cards will remain the most popular mode of payment online for the next five years. They will however lose some of their share to debit cards, prepaid cards, gift cards, as well as other alternative modes of payment. These predictions have come from Javelin Strategy & Research. As Javelin has predicted with regard to its 2010 update on Online Retail Payments, the forecast is that other alternative modes of payments will increase more than two-fold in volume by the end of 2015.
As per the predictions by Javelin the retail sectors electronic commerce will grow in volumes from $249 billion now to $443 billion by 2010. The overall sales in the retail sector will grow at a much slower rate. But as per Javelins forecasts the e-commerce total sales share will go beyond 9.2% from 6.4%. The fresh report is as per the data that has been collected online through a panel that has been randomly selected out of 4,998 consumers in the month of September, along with other data that has come in from government agencies and payment companies along with Javelin`s earlier research.
While all major card brands have lost out on online market share for a while now, they will still continue to remain the most preferred mode of payment in the year 2015. As Javelin states that in spite of the cutbacks by issuers in the wake of the recession period, and reduced usage by consumers on a voluntary basis, the volumes of purchase online is still likely to increase (CAGR of 10.4%). Credit card volumes are likely to grow from $99.9 billion to $163 billion by 2015.
The next in line after credit cards is the debit cards and its market share is at 28% and there has been little change since 2009. The CAGR of debit cards is at 11.8% and its volumes are likely to grow in the next five years.
Younger consumers have grown up with the internet and mostly prefer debit cards over credit cards due to the fact that it is most suited in terms of real-time updates on accounts which are ideal for youngsters. They can also do all other banking functions online. They consider debit as more of a natural payment option than credit.
Other online alternatives such as PayPal, prepaid cards, as well as gift cards are the most dominating payment options and will grow to 20% by 2015.