Online consumer payments: Determining the key components of a winning online payment solution

Table of contents

ABOUT DATAMONITOR

CHAPTER 1

INTRODUCTION

The Cards & Payments Briefings Service

What is this briefing about?

Who is the target reader?

How to use this briefing?

Scope

Why is this briefing relevant to readers in the Asia-Pacific region?

Datamonitor's definition of an online consumer payment

CHAPTER 2 MARKET CONTEXT

Consumers' online behavior

Internet access is fast becoming the norm in many European markets

Accounting for the increasing number of consumers accessing the Internet

Many consumers conduct research online but fewer are willing To buy online

Travel is the hottest online sector

Making payments online is still a minority pursuit

Sizing online consumer payments markets

The US online consumer payments market dwarfs European markets

Conclusion

CHAPTER 3 COMPETITIVE DYNAMICS

Credit and debit cards

Credit cards are the dominant online payment mechanism in many markets

Still more than 80 per cent of consumers who have bought online have paid with a credit card

Accounting for the dominance of credit cards in the online environment

Debit cards are most commonly used online in France and the UK

Accounting for the relatively low online usage of debit cards

Online card fraud is on the increase

Fighting back against online card fraud

Verified by Visa is based on the 3D-Secure protocol

MasterCard SecureCode is based on the Secure Payment

Application (SPA) protocol and the Universal Cardholder

Authentication Field (UCAF)

Maestro's eCommerce program is based on pseudo card numbers

The future of the card scheme security initiatives hinges on maximizing acceptance and enrollment

Successful card scheme security initiatives will strike a blow against other online payment solutions

Virtual card numbers: using a different number every time

Allowing consumers to shop online without having to disclose

Their true credit card number

Orbiscom is the main vendor in the virtual card number space

American Express cuts back its virtual card number service

Developments in the virtual card number space have now slowed

A SWOT analysis of credit and debit cards in the online space

Prepaid online payment methods

Catering for demand among the young�cand young at heart

Prepaid cards are replacing prepaid vouchers

Making prepaid cards appeal to adults

Serving the micropayments market

An online and offline alternative

Paysafecard: the pioneer European prepaid card provider

Spending on the paysafecard

Paysafecard is more than a micropayment solution

Paysafecard has attracted 1,600 merchants

Splash Plastic remains one of the largest players in the prepaid space

Spending on a Splash Plastic card

Splash Plastic currently has more than two million cards on issue

A variety of other providers compete in the prepaid online payment space

The online prepaid payment space is littered with failures

To avoid failure maximizing merchant involvement is key

Solutions must promote the insight into teen spending that they can offer

Solutions must broaden their appeal away from purely Teenagers

A SWOT analysis of prepaid online payment solutions

P2P payment solutions

Establishing a niche in the online payment space

Auction websites appeal to individuals' thrill of the chase

P2P payment services benefit from the popularity of online auctions

PayPal is the dominant player in the online P2P payments space

PayPal now has more than 25 million account holders

PayPal can still not be described as a truly global solution.

However, multi-currency acceptance is a step in the right direction

A number of banks have launched P2P payment services in

The UK

Outside the UK P2P payment services are provided in the US, Canada and the Netherlands

A SWOT analysis of P2P payment solutions

eWallets

eWallets: bringing security and convenience to online payment

When is an eWallet not an eWallet�c.when it is an ePurse

Mixed fortunes in the eWallets space

Earthport driving developments forward

Egg tried its luck with the Egg Wallet

Securicor withdrew Safedoor after just a year

Gator still going strong amid controversy

PassPort's defenses brought into question

The future of eWallets is in helping consumers to remember their passwords

A SWOT analysis of eWallets

mPayments solutions

mPayments solutions: giving a new role to the mobile device

The mobile operators take a too big slice of the cake

Vodafone: taking the mPayments model forwards

mPay Bill: utilizing the reverse billing approach

mPay Cards: taking the eWallet into the mobile world

Mobipay: a mPayments solution for payment both on and offline

Mobipay: starting out in Spain

Tackling the Spanish market first

A range of online and offline uses

A system based on a series of messages

Datamonitor remains optimistic about the future of Mobipay

Paybox: leaves the European mPayments market

Paybox's withdrawal highlights the difficulties in achieving success

A SWOT analysis of mPayments solutions

Conclusion

Benchmarking online consumer payment solutions

Credit and debit cards win in five of nine categories

Opportunities for micropayment solutions but there may be fallout

CHAPTER 4 THE FUTURE DECODED

Forecast of the growth of online consumer payments to 2007

US online consumer payments will reach EUR168.2 billion in 2007

CHAPTER 5 APPENDIX

Research methodology

IMPACT

Supplementary data

Definitions

B2B

B2C

Credit card

Debit card

ePurse

eWallet

Macropayment

Micropayment

mPayment

P2P

PDA

PIN

Reverse billing

SMS

Relevant links

Related reports

Reports

Briefings

Datamonitor's custom research capabilities

SPP writing team

How to contact experts in your industry

LIST OF TABLES

Table 1: Percentage of consumers that have accessed the Internet from specified locations during the last 12 months

Table 2: Percentage of consumers engaging in specified activity online during the last 12 months

Table 3: Percentage of consumers stating that the Internet is their preferred channel for purchasing specified product or service

Table 4: Online consumer payments by consumers in Europe and The US, 2003e

Table 5: Percentage of consumers that made online purchases via specified means

Table 6: Types of purchase that cannot be made using American Express Private Payments

Table 7: Paysafecard's tale of the tape

Table 8: Splash Plastic's tale of the tape

Table 9: eBay's tale of the tape

Table 10: PayPal's tale of the tape

Table 11: Forecasts of online consumer payments, 2003e-2007f

Table 12: Percentage of consumers that have engaged in specified online activity during the last 12 months

LIST OF FIGURES

Figure 1: More than 50 per cent of consumers have accessed the Internet from home during the last year

Figure 2: There is a considerable differential between the percentage of consumers who research products and services online and the percentage who purchase them online

Figure 3: The behavior of US consumers over the last 12 months suggests that they have warmed to booking travel online

Figure 4: Making online payments is still a minority pursuit among Consumers

Figure 5: In 2003, the UK will be the largest market for online Consumer payments. However, it will still be far smaller than the US

Figure 6: Credit cards are the most commonly used online payment method although paying by mail on receipt of invoice is very popular in Germany

Figure 7: A SWOT analysis of credit and debit cards

Figure 8: A SWOT analysis of online prepaid payment solutions

Figure 9: A SWOT analysis of P2P payment solutions

Figure 10: A SWOT analysis of eWallets

Figure 11: A SWOT analysis of mPayments solutions

Figure 12: A benchmarking exercise for online consumer payment solutions

Figure 13: The US will remain easily the largest market for online consumer payments. However, it will not be the fastest growing over the next five years

Figure 14: Datamonitor's core consulting capabilities