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The Role of Alternative Payment Methods in Global B2c E-commerce Increases in Importance

Hamburg-based B2C E-Commerce and Online Payments market intelligence company yStats.com has published a new report titled “Global Alternative Online Payment Methods: First Half 2015.” According to the firm’s CEO & Founder, Yücel Yelken, “Preferences for online payment methods differ around the world, with alternative payment methods being more popular than credit cards in some emerging and even advanced markets”.

An important trend in the global online payment market is the increasing role of alternative payment methods, though the use of credit cards still accounts for a major share of B2C E-Commerce globally. Especially in emerging markets, where bank card penetration is not as high as in advanced countries, alternative methods are an important factor in online shopping. In Asia-Pacific, for instance, close to a half of online shoppers in India preferred to pay with cash on delivery and in Indonesia, over two thirds indicated a preference for bank transfer last year. In the world’s largest online shopping market, China, online payment through third-party providers was the most used method, with the combined volume processed by these providers growing by one-half in 2014.

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The alternative payments trend is evident in Latin America and Eastern Europe, as well. In Peru and Chile, more online shoppers opted for alternative payment methods rather than credit cards last year.  While in other major markets, such as Brazil, Mexico and Argentina, bank cards dominated, yet a substantial share of online shoppers paid with Boleto Bancario, PayPal, cash on delivery and other alternative methods. Over in Eastern Europe, cash on delivery was the most used payment method in the Czech Republic, while in Poland bank transfer succeeded as the top method of choice, followed by cash. As bank card ownership in these countries increases, credit cards could take the lead, but alternative methods would still remain significant. In Russia, for example, credit cards overtook cash on delivery as the payment method most used in online shopping, but cash was in close second, followed by other alternative methods such as E-Money and terminal payments.

Furthermore, among the advanced markets there are exceptions to the dominance of cards in online payments. In Germany, for example, alternative methods such as invoice, direct debit and digital payment accounted for a larger share of sales than credit card in 2014. In the countries where credit cards rank first, there is still plenty of room for alternative methods to flourish, such as in Canada, where around 50% of online shoppers preferred to pay with a credit card as of spring 2015, but the rest chose other methods, including close to one-third preferring PayPal.