Online Consumer Payments: Sizing the Opportunity
This report examines the online consumer payments market in 28 global markets, considering the overall market size and its development, as well as the importance of mobile devices as opposed to desktop and laptop computers. The report also breaks down the online market by the type of goods consumers buy and the tools they choose to pay with, considering how consumer buying behavior has changed and the drivers of this change.
Online consumer payments remain the biggest growth market in payments, and will continue growing strongly as more consumers gain access to the internet and to tools that can be used online. Developing countries – particularly China – are expected to be at the forefront of this growth, although even the most developed online commerce markets will grow strongly over the next five years.
- Sizes the online consumer payments market in 28 countries.
- Analyzes the breakdown of online commerce by channel in all 28 markets.
- Identifies the major barriers to consumer engagement with the online channel and how to overcome these
- Considers consumer spending patterns on goods and services online and how these have changed in recent years.
- Explores the online payment market by payment tool and assesses the position of traditional payment tools such as cards against alternative tools in key geographic markets.
- Provides key strategic recommendations for merchants and payment providers based on the prevailing trends in the online payments market.
- China overtook the US as the world’s largest online commerce market in 2015, with Chinese consumers spending a total of $699bn online that year.
- 20% of the total value of online commerce transactions across all markets will be accounted for by m-commerce by 2020, with the market recording a compound annual growth rate of 17% from 2015 to 2020.
- Consumer spending patterns online have shifted over the past three years to a wider range of merchant categories. The market is no longer dominated by high-ticket goods categories to the same extent it has historically been.
Reasons to buy
- Understand the key facts and figures in the global online consumer payments market.
- Learn how much of online consumer spending is done through mobile devices and how the composition of the market is likely to change in the future.
- Find out what is keeping consumers from using the online channel and how to boost consumer engagement.
- Discover key consumer spending dynamics online in terms of goods purchased and payment tools used.
Table of Contents
1. EXECUTIVE SUMMARY 2
1.1. Online payments is the biggest growth market in payments 2
1.2. Key findings 2
1.3. Critical success factors 2
2. THE GLOBAL OPPORTUNITY 6
2.1. Introduction 6
2.2. Chinese consumers spent $699bn online in 2015 6
2.2.1. Households in the UK spend the largest amount of any country online on average 7
2.2.2. M-commerce accounts for 50% of online commerce by value in Malaysia 9
2.2.3. Different devices enable different shopping behaviors 10
2.2.4. Merchants and payment providers need strategies for both app and browser-based commerce 10
2.3. Online commerce is still not universal, even among internet users 11
2.3.1. Personal preference is the most common reason consumers do not shop online, although security is also a significant concern 12
2.3.2. Physical outlets are a necessary component of successful online strategies 13
2.3.3. Fraud and fear of fraud are both serious issues for the industry 14
2.3.4. Concerns about online card fraud are widespread, irrespective of fraud risk 14
2.4. Consumer spending patterns online have changed significantly over the last five years 16
2.4.1. Food and drink accounted for 15 billion online sales in 2015 17
2.4.2. Online buying trends reflect consumersÂ’ general channel preferences 18
2.5. Payment cards are losing their dominance over the online market 18
2.5.1. Payment cards are held back by static passwords and inconvenient online forms 19
2.6. PayPal is the highest-profile digital wallet in Western markets 20
2.6.1. PayPalÂ’s One Touch demonstrates the power of convenient online experiences 21
2.7. Domestic payment tools have established themselves in several markets 22
2.7.1. Alipay is the single largest domestic payment tool operating globally 22
2.7.2. iDEAL demonstrates the potential of OBePs 23
2.7.3. OBeP services offer a lot to merchants, but must persuade consumers of their benefits 24
3. STRATEGIC RECOMMENDATIONS 26
3.1. Different devices require different approaches to online commerce 26
3.2. Bricks and mortar will remain relevant into the long term 27
3.3. Payment tools must balance security and convenience 27
4. APPENDIX 29
4.1. Abbreviations and acronyms 29
4.2. Methodology 29
4.2.1. GlobalDataÂ’s 2016 Consumer Payments Insight Survey 29
4.2.2. GlobalDataÂ’s Online Consumer Payments Analytics 29
4.3. Bibliography 30
4.4. Further reading 31
List of Figures
Figure 1: China overtook the US as the largest online commerce market in the world in 2015 7
Figure 2: The average UK household spent a total of $5,900 online in 2015 8
Figure 3: M-commerce is most developed in Southeast Asian markets 9
Figure 4: More than half of internet users in South Africa and the UAE do not shop online regularly 12
Figure 5: 40% of consumers who do not shop online regularly prefer to see what they are purchasing in-store 13
Figure 6: Online card fraud is concerning for the majority of consumers - even in low-risk markets 15
Figure 7: Flight and hotel bookings accounted for 14% of online spending globally in 2015 16
Figure 8: Food and drink accounted for 14% of the total number of online transactions in 2015 17
Figure 9: Payment cards are particularly dominant for online spending in Europe 19
Figure 10: PayPal has a strong market presence in Western Europe 21
Figure 11: In China, digital wallet Alipay holds a 33% share of online commerce by value 23
Figure 12: Over half of the total value of Dutch online commerce is accounted for by iDEAL 24
Secondary Research Information is collected from a number of publicly available as well as paid databases. Public sources involve publications by different associations and governments, annual reports and statements of companies, white papers and research publications by recognized industry experts and renowned academia etc. Paid data sources include third party authentic industry databases.
Once data collection is done through secondary research, primary interviews are conducted with different stakeholders across the value chain like manufacturers, distributors, ingredient/input suppliers, end customers and other key opinion leaders of the industry. Primary research is used both to validate the data points obtained from secondary research and to fill in the data gaps after secondary research.
The market engineering phase involves analyzing the data collected, market breakdown and forecasting. Macroeconomic indicators and bottom-up and top-down approaches are used to arrive at a complete set of data points that give way to valuable qualitative and quantitative insights. Each data point is verified by the process of data triangulation to validate the numbers and arrive at close estimates.
The market engineered data is verified and validated by a number of experts, both in-house and external.
REPORT WRITING/ PRESENTATION
After the data is curated by the mentioned highly sophisticated process, the analysts begin to write the report. Garnering insights from data and forecasts, insights are drawn to visualize the entire ecosystem in a single report.