The value of consumer spend on remote payments for digital and physical goods – e-Retail – will surpass $3.3 trillion this year, up 10% on 2017’s total of $3 trillion.
The research argues that alternative payment mechanisms will comprise an ever increasing proportion of online spend. PayPal already accounts for 20% of mobile and online physical goods transactions made outside China, while the success of Alipay and Weixin Pay within China means that these two players combined now account for 45% of global payment volumes.
It also claims that there is a significant opportunity for more nascent options, such as the various OEM-Pay solutions and carrier billing, recently adopted by Amazon in Japan for physical goods purchases.
‘White-listing’ a Challenge for European Merchants
The research also highlights the major pain points for merchants and consumers. It argues that European merchants need to be aware of the implications of PSD2 on card-on-file, meaning they need to be ‘white-listed’ by consumers for payment details to be stored. Indeed, it claims SCA (Secure Customer Authentication) obligations could potentially adversely impact on conversion rates by increasing friction at checkout.
Meanwhile, the research claims that retailers are struggling to resolve issues around customer identification within the broader commerce framework.
As research author Dr Windsor Holden pointed out, ‘Payment processors and other key stakeholders need to work closely with merchants to ensure they can recognise individual consumers, regardless of device and whether they are purchasing online or offline, to deliver the optimal experience across the retail lifecycle’.
Furthermore, the research stresses that not only should merchants localise supported payment mechanisms (such as iDEAL in the Netherlands and credit card instalments in Brazil), but also the entire payment flow. It recommends they work with payment processors to test optimal flows for target markets.