There are three chunks of statistics that I think serve to highlight major trends.
1. In the US, “alternative” e-payment methods for online commerce (ie, not credit or debit cards) were about 12% of the market by value in 2005 and will grow to around 26% by value in 2009 (source: Celent, 6/06). Most growth will come from online PIN debit and new ACH access.
2. Overall, e-commerce merchants have managed fraud down from 3% in 2002 to 1.6% today, but at a substantial cost: more than a billion dollars invested in back-office staff and fraud-detection technology.
3. Credit cards are losing e-commerce market share perhaps more rapidly than many observers may have thought: they now account for 58.3% of online sales, down from a dominant 96% share in 1999. By 2009 that share will have dwindled to just 48.4%. This decline comes as credit cards continue to make gains in the U.S. economy as a whole. They account for 26.1% of all transactions, up from 22.1% six years ago, and will reach a 29.3% share by 2009.
Obviously, it’s not for me to tell credit card issuers how to run their own businesses (that’s the job of management consultants), but fixing CNP must be an absolute priority.