Ecommerce and online payments are two major pillars of online transaction. The technology has been rapidly growing and is driven by mobile devices. Promoting these convenient services over the internet in various forms had become a routine that grabs the customers’ attention, and they end up buying things or services that may not be of any use to them. The process has become so simplified that people end up buying things online quite frequently. And each time they make a transaction, there is a service fee charged at the payment gateway. This is expected to be a billion-dollar business. Mobile payments are expected to grow significantly from $52 billion to $142 billion by 2019. Everyone is in the rat race of grabbing an opportunity to make big dollars.
The support system of ecommerce and online payments
Technology is the backbone of both online and in-store payment systems, and we are witnessing change in the methods. It has been really convenient to make either online or in-store payments.
We have multiple ways to enable mobile devices for transactions. Most popular ones are: near field communication (NFC), quick response (QR) code, Sound wave or Bluetooth low energy (BLE) technologies. POS system is enabled to process in-store payments using these technologies. These processes are not only time saving but also are secured payments. Data is not shared or disclosed; also customers are benefited by multiple discounts that they are eligible for on subsequent bills.
Security and convenience is given equal importance in online transactions as well. They are usually referred to as "Digital Wallet." The payment systems are designed to be less obtrusive and more effective. This makes the system more inviting. They are focusing on making the experience hassle free. As most of the time people try to make purchases on mobile apps, it is difficult to navigate through multiple pages at the same time which is a detractor of the shopping experience. And often the merchants experience abandoned carts, which represent a potential sale. However due to the hassle of navigating and looking for multiple products at the same time the customer loses interest.
In August 2014, Aite Group’s report said that “50% of U.S. smartphone users made at least one mobile payment, 40% purchased in-store and 45% transferred money to another person”.
The online payment segment continues to grow with multiple partners like: Apple Pay (AAPL, Financial), Wal-Mart (WMT, Financial), Best Buy (BBY, Financial), Target (TGT, Financial), Gap (GPS, Financial) etc. One of the most successful online payment system and has been a market player for longest period of time is eBay (EBAY, Financial) PayPal. The card swiping device called PayPal and a tie-in with Discover Financial Services (DFS, Financial) enabled its customers to shop with more ease. The technology is also in harmony with payment gateways and customer convenience. There have been multiple systems developed like: CurrentC for iOS and Android users. NFC is the technology supported by Google (GOOG, Financial) and Apple; they are still under pressure to upgrade the systems in order to provide more safety to consumers against fraudulent activities. They also wanted to be extra careful for fraudulent transactions and identity theft; retailers are racing to meet the Oct. 15 deadline. Other than credit and debit card information, it enables users to store loyalty cards, discount coupons and offers that they can apply during purchase.
Outcome
Mobile banking witnessed its growth in 2013. The banking sector has prioritized bill payment online with 86% already offering the services or all set to offer it by the end of 2015. Also, 20% of banks plan to summarize their offerings into a single app, 30% into separate ones. This could be the reason Accenture predicts that by 2020, traditional banks will lose 15% market share to online-only players including branchless banks like Citibank (C, Financial) and new technology adapters.
With online transactions expected to boom over the next few years, the primary concern remains security. They will have to spend a huge amount on secure payment systems, as we see the flood of customers going online.
