New research reveals alternative payment methods are set to replace card payments by 2020. Worldpay’s latest global overview of online payment habits, the Global Payments Report, predicts the global e-commerce market will grow 10.4% by 2020.
The report, which compiled data from 30 countries, suggests China, the U.S. and the U.K. will continue leading the charge, but the growing fragmentation in global e-commerce will soon change the way these consumers pay – as more niche alternatives like mobile wallets, bank transfers and prepay cards continue to steal market share from more traditional payment options like credit cards.
Though credit and debit cards still dominate more than 50% of the market in most countries in 2016, including the U.K., U.S., Brazil and Hong Kong, the report predicts a relative decline in global usage by 2020 – by 4% for credit cards and 1% for debit cards. Mobile wallets are a close second for many e-commerce superpowers, and already lead in China with 56% of market share. For the U.S., mobile wallets are projected to grow by 7 percent, overtaking use of both credit and debit cards by 2020.
Adoption rates for alternative payment methods are predicted to grow slowly but steadily in the next five years, as options including bank transfers (2%), prepaid cards (2%) and prepay (1%) begin to overtake cards, particularly in emerging markets. The Indian e-commerce market, for example, prefers alternative payment methods to cards and is primed for rapid growth.
Predicted to grow a massive 28% per annum from 2016-2020, India is set to overtake the U.S. as the world’s second largest e-commerce market by 2034 at $2,039 billion. The most popular payment method in India in 2016 is bank transfers at 27%, followed by cash on delivery at 22%. By 2020, bank transfers, prepaid cards and prepay are expected to gain market share while credit card usage is set to decline by 6%.
Through a combination of technological change, rising income levels and favorable demographics, South East Asia is set to be the next center of explosive e-commerce growth after China. According to Worldpay’s projections, China’s share of the world online retailing market will reach its peak in 2034, accounting for 50% of global spend.
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