According to a new market research report by Juniper Research, remote payments for digital and physical goods to surpass $3.3 trillion mark in 2018.
The report by Juniper Research entitled Mobile & Online Remote Payments for Digital & Physical Goods: Opportunities & Forecasts 2018-2022 argues that alternative payment mechanisms would comprise an ever increasing proportion of online spend.
One of the key findings of the report is that PayPal is driving growth in alternative payments niche. 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 claimed that there was 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 highlighted the major pain points for merchants and consumers. It argued that European merchants needed to be aware of the implications of PSD2 on card-on-file, meaning they would need to be ‘white-listed’ by consumers for payment details to be stored. Indeed, it claimed SCA (Secure Customer Authentication) obligations could potentially adversely impact on conversion rates by increasing friction at checkout.
Meanwhile, the research claimed that retailers were 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 stressed 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 recommended they work with payment processors to test optimal flows for target markets.
Juniper Research is acknowledged as the leading analyst house in the digital commerce and fintech sector, delivering pioneering research into payments, banking and financial services for more than a decade.