Report: Debit Creeps Up on Credit for Online Transactions

Dec. 20, 2010

The economic downturn has not dampened consumer online spending, but it is changing how consumers pay for their purchases, according to a new report from Javelin Strategy & Research. While credit cards are still the most popular way to pay online, Javelin’s 2010 Online Retail Payments Update and Forecast: Shift in Consumer Payment Behavior – A Temporary Reaction or a New Reality? found that credit cards fell from 44 percent of online total payments volume in 2009 to 40 percent in 2010. At the same time credit card transaction velocity (the average number of times that a card is used per month for online purchases) fell significantly. Debit cards increased their market share to 29 percent of total online purchase volume in 2010, though consumers are not solely replacing their credit card purchases with debit. The report noted that online alternative payment methods such as PayPal, Google Checkout and Amazon also gained market share and are forecast to continue to grow in the coming years. “With the broadening in consumer payment behavior, retailers should diversify the payment options they accept to attract and retain e-commerce buyers, said Beth Robertson, director of payments for the San Francisco-based consultancy. “The regulatory environment also continues to heavily influence merchant acceptance, issuer positioning and, ultimately, consumers’ use of various payment options in both online and offline environments. Many of these changes will create enduring behavioral shifts that merchants need to accommodate.”