Report: Online Merchants Dropping the Ball on Alternative Payment Options

Oct. 25, 2010

Consumers are spending more online and more than half are paying using alternative payment options, according to a new report from payments consultancy Javelin Strategy & Research and, the e-commerce division of the National Retail Federation. But while consumers show interest in alternative payment methods—such as PayPal, Bill Me Later, Checkout by Amazon, eBillme or Google Checkout—the report found only a third of online merchants offer those methods. “Consumers are moving away from using credit cards and have increasingly adopted pay-now options such as debit cards or pay-before options such as gift cards,” said Mary Monahan, Javelin’s research director. “Many merchants underreport the market use of debit cards and are not aware of the much broader mix of payment options that consumers are already actively using. If merchants are not aware of the actual mix of debit, credit card, and other payment transactions they are handling, it may prevent them from taking full advantage of discounting opportunities, routing, or reduced fees available under the Durbin Amendment regulations, scheduled to go into effect in early 2011.” The report, Online Alternative Payments: A Merchant vs. Consumer Divide , found that less than 20 percent of the merchants surveyed consider adding online alternative payment options a high priority over the next 12 months.