By : Nav Kullar
May 14, 2018 01:23 PM
With e-commerce sales continuing to increase every year, having fast, effective payment solutions to facilitate this is essential. With more countries investing in faster payments solutions, there are more options than ever for people to complete a purchase online. But the number one option remains online card payments, and new research has highlighted several reasons why this is the case.
One of the key drivers for online card payments at the moment is the growing proliferation of mobile devices. RBR’s Global Payment Cards Data and Forecasts to 2022 study found that in 2016, the number of online card payments made online increased by 28 percent compared with the previous year, accounting for nine percent of the 310 billion card transactions made worldwide.
The study also forecast that by 2022, the total number of card payments will rise to 483 billion, of which 14 percent will occur online. As well as greater smartphone penetration, improved internet access in developing countries and more merchants offering online sales will also contribute to this growth.
“Customers appreciate the convenience of e-commerce as it allows them to make impulse buys on the move via mobile, and the prevalence of one-click checkouts and suggested additional items has sped up and increased the number of transactions,” the study noted.
However, while internet shopping and online card payments go hand-in-hand in many parts of the world, this isn’t the case everywhere. Indeed, RBR’s study noted that there are a “surprising number” of countries where cash-on-delivery remains the norm for many online purchases. While this method has long proven popular in India, helping support the nation’s booming e-commerce sector, it is also seen in places such as the Middle East, Africa and eastern Europe.
Figures from Statista show that overall, almost a quarter of online shoppers around the world (23 percent) preferred this method of payment in 2017. There may be several reasons for this, with RBR noting that the method is particularly useful in the developing world, as it allows customers who are not engaged with formal banking systems access to online shopping.
However, it may also reflect a continued lack of trust in card payments, with many people reluctant to give out their card details online. In some places, a lack of consumer trust also means people prefer cash as it ensures they do not pay money until the items are in their hands and they have a chance to inspect the goods.
Answering questions over security is still one of the most important factors for card providers, as a lack of trust remains a common barrier. However, in this regard, RBR’s study showed good progress, with the firm noting that enrolment in 3-D Secure programs such as Mastercard SecureCode and Verified by Visa is becoming more widespread.
Efforts to improve the acceptance of payment cards also need to be made, particularly in developing countries where many domestic scheme cards are not accepted online. Efforts to increase internet access in these regions – where connectivity can still be sporadic – will also naturally help boost demand for online card payments.