Talking about alternatives, it’s worth noting that new cash-replacement pre-paid services (such as the Money Pak), e-billing services and other new entrants continue to add to the possibilities in the world of “alternative” online payment options. These ranks are led by PayPal. In less than a decade it has taken nearly a quarter of the U.S. online payments market (it handled more than $12 billion in payments in the last quarter). While the majority of its processing volume still comes from eBay, non-eBay payments are already 45% of the total and still growing.
Taken together, theese alternatives are nearly a third of online market and the powerful combination of consumer fears about security and consumer laziness are driving them. As everyone’s favourite case study, PayPal, demonstrates perfectly. Consumers know that if I they see the PayPal option on a payment page, it means that they have only to enter a password and hit OK and then they’re done. No name and address, no going in to the other room to get a card from their wallet, no expiry date or CVV or the rest of it. This is why I use PayPal whenever I see it offered: because I am lazy, and therefor entirely representative of the mainstream consumer base.
I’m not altogether sure whether “alternative” has any real meaning in this context any more. In a couple of years, credit cards will be lucky to get half of a market that they started off with 98% of a decade ago. Broadly speaking, since those heady days when they saw off DigiCash and VisaCash and Cybercoins and goodness knows what else, there has been essentially no innovation whatsoever from the credit card world. Those of us old enough to remember the dead-end of Secure Electronic Transactions (SET) might have thought at the time that some other new initiative would come along and pick up the baton (adding smart card readers to PCs, that sort of thing) but that never materialised. The “band aid” of 3D secure hasn’t transformed the space as the scheme perhaps would have hoped. As is generally the case, I think, organisations have a tendency to label fiddling around at the margins of core business as “innovation” and get on with it. This serves tolerably well as a strategy, up until the moment the core business goes away. When the alternatives have more than half of the market, I suppose we’ll have to start labeling credit cards as “alternative” instead.
These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]