If we look at statistics, there has been 35% growth in alternative payment systems and by 2017, it is estimated that such alternative payment methods will contribute to majority of eCommerce online transactions with a 59% share of the market. These alternative payment methods include mobile payments, eWallets and digitization of bank transactions.
Alternative Payment Methods
In this section, we will closely look at these different alternative payment methods and how effectively they are being used as a means of online transactions.
eWallets have great prospect and their market share is expected to be 41% by 2017 and main players would be PayPal and Alipay. In countries such as China, eWallets are quite popular and have as much as 44% share of the market while in U.S. it is still 16% with people preferring cards more to eWallets. Looking at the popularity of eWallets, some of the leading card payment companies such as MasterCard and Visa have also started their own eWallet service such as the MasterPass from MasterCard started in 2013.
Use of Smartphones is on the rise and we see it used more and more in financial transactions, ranging from online shopping to banking. The scope for growth is tremendous in mobile payments and this industry is expected to reach overall revenue generation of $20 billion. The sources for revenue are going to be varied and would include mCommerce, virtual currencies and mCoupons.
Banks are facing good amount of competition from internet as well as mobile companies and if they have to stay in the market then it is important for banks to embrace digitization. Banks already have an advantage in terms of security infrastructure, financing and system for enabling various forms of payments, which they can use to their benefit.
In Southeast Asia, there has been considerable rise in eBanking with Citigroup having around 7.4 million clients. In Philippines, the company is collaborating with Smart e-Money to combine credit card usage with mobile technology. Similarly, DBS has started mobile wallet application in Singapore to make financial transactions simpler for its customers.
Scope of Growth for Alternative Payment Systems
There is considerable opportunity for growth in alternative payment systems in many of the Asian countries such as China and India. Such modes of payment are already popular in many of the Asia-Pacific countries like Australia, Hong Kong and Japan with other countries also adapting to such alternative payment systems.
Alternative payment systems are growing and there is wide consumer interest in such payment systems. Merchants will have to analyze this demand and include such alternative payment methods into their system to succeed.