New data proving an inevitable switch in the online payment sector.
Online payments by credit cards account for more than 80% of the market share with more than €800 billion in transactions. This business model long representative of the traditional banking institutions and credit card issuing companies is undergoing a major transformation with the introduction of better payment solution alternatives.
Flexible financial regulations have opened the market to new institutions providing fast, simple, and cheaper payment solutions. These new companies are constantly reshaping the way we interact with banks and spend our money whether online or at local merchants.
In certain regions of the world, such as the EU, new measures have been adopted to inspire innovation and promote fair competition between all actors in the financial market. These new measures offer unique opportunities to small companies looking to make a name in the industry, at the expense of the major credit card providers such as Mastercard and Visa.
Why are alternative payment solutions so attractive to customers?
Today, the average user will leave a website or any other network-based platform if it takes more than 3 seconds to load. Time means money! and time is precious to everyone. Pages that don’t load immediately, poorly designed interfaces and lengthy forms are the number one causes of cancellation. These issues are why customers don’t reach the end of the purchase funnel.
Today, to make a transaction with a credit card, customers must manually fill a payment form with lots of time-consuming details (Card information, Card owner’s name, authentication code via email or phone, address…). New payment solution providers recognized the problem and saw it as an opportunity to introduce platforms based on new technologies.
Most payment solutions offered today are characterized by:
- Better security
- Better user interface and simplified functionality
- Accessibility via Mobile phones
- Faster processing time.
- No middle man or third party intermediary involved. (Account-to-Account)
Technologies used in platforms such as Swish in Sweden, iDeal in the Netherlands, or Pay and Play by Trustly, allow customers to make payments from their bank account, directly to the merchants’ account in less than 3 clicks. In certain cases, a simple bankId replaces the registration form and suppresses the need to open accounts.
Market Predictions based on research, surveys and raw data.
Industry experts predict a major increase in the usage of alternative online payment solutions. Many companies are heavily investing in the power of market research, extensive surveys, and other efficient methods to collect data.
The data collected in these market research will help merchants (online casinos, e-commerce, billing companies…) understand the different factors and trends driving the customers’ decisions when choosing a payment method while in the cashier.
Being able to anticipate the changes that could affect the customers’ acquisition journey is crucial for any online business with long term objectives. Effective use of the information published in consumption data reports for customers can help merchants make better decisions, improve user experience, and adapt to the market trends.