We’ve been tracking a lot of surveys, reports and studies on online shopping trends lately that have been full of data on traffic numbers and money spent. Today, however, we came across some research that caught our eye if for no other reason than it surprised us a bit.
Research from Javelin Strategy & Research indicates that more and more online shoppers are now eschewing credit cards and using prepaid gift and debit cards as well as alternate payment methods like PayPal and Google’s Checkout service to complete their online purchases instead.
Javelin estimates that consumers spent roughly $205 billion in online purchases last year. Credit cards were still the top payment option at 43.5 percent of the total online payment volume, with debit cards at 28 percent, PayPal/Google Checkout-type tools at nearly 16 percent and prepaid/gift cards accounting for almost 7 percent of online payment volume. Javelin proposes, however, that the latter two methods of payment will only increase in the near future while it expects credit and debit card usage to decrease.
“Prepaid and gift cards are hitting stride in the online payments environment,” says Javelin analyst Elizabeth Robertson.
Why is this, you ask? According to the company, the increase in popularity of non-credit card payments can largely be attributed to consumer sentiment and concern at a time of continued economic trouble. Quite simply, shoppers are choosing to pay for their purchases right away rather than deferring them and taking on more debt with credit cards.
Javelin’s research included some 5 year estimates to support its overall claim that these alternate payment methods will only continue to cut into credit and debit card usage. Its’ 2014 forecasts for the percentage of total online payment volume of the major payment options in play:
-Credit cards: 39.4% (decreasing)
-Debit Cards: 25.6% (decreasing)
-Prepaid/gift Cards: 10.7% (increasing)
-PayPal/Google Checkout, etc: 19.2% (increasing)
That’s nearly a 4 percent change up and down across the board, with store-issued credit cards compiling the final 5 percent. Overall Javelin anticipates an overall increase in the number of U.S. adults regularly shopping online (63 percent to 78 percent expected in 2014) as well.
We’ve always advocated using credit cards as your primary purchase tool online, mostly because they offer the most protection against fraud and give a shopper the most flexibility with bigger purchases. But this information and Javelin’s projected figures regarding online payment systems is certainly intriguing. We cannot argue with the logic behind using things other than credit cards to avoid adding on too much debt, but we want to hear from you. Do you agree with Javelin’s predictions? Are you already one of the many online shoppers keeping your credit cards tucked away for PayPal or a gift card?
Leave us a comment!