Report: Virtual Currencies Could Shift Power in Payments

June 23, 2011

A new report from San Francisco area Javelin Strategy & Research forecasts that the payments services market share will shift from financial institutions to socially networked providers. Javelin found that two-thirds of consumers who have used an alternative payment method in the past 12 months are current Facebook users, compared to 58 percent who used credit cards. Javelin said in Virtual Currency and Social Network Payments – The New Gold Rush that the increased use of virtual currencies and socially networked payments present new challenges to traditional payments services providers, regulatory bodies, and even cross-border economies. “FIs should keep an eye on social networks and the virtual economy and determine how to position themselves,” said Beth Robertson, director of payments research at the Pleasanton, Calif.-based consultancy. “Currently, credit and debit cards have the greatest share of the overall e-commerce payment market, comprising 40 percent and 29 percent of all e-commerce transactions, respectively. However, nontraditional payment options like alternative online payments and prepaid and gift cards will gain traction in the coming years and take market share and transaction fees away from FIs.”