It all started with Amazon one-click in 1995. Now different buy buttons are widespread across the web. PayPal remains the most pervasive buy button online, with 67% of top e-commerce websites accepting it as a payment method, according to a recent PYMNTS.com survey.
Proving that an early start is an advantage, the second most prevalent button is Amazon Pay, which is accepted by ten percent of merchants. New to the game are the checkout wallets of the international card schemes. Visa Checkout, Masterpass and Amex Express Checkout are accepted by 4.2%, 3.3% and 1.1% of the 1,045 merchants in the study.
However, the average purchase amount on sites featuring card scheme checkout buy buttons was higher. Use of Amex Express Checkout corresponded with the highest average price. This almost certainly reflects the higher income level of its account holders. Conversely, PayPal as the most widely-accepted wallet had the lowest average price.
The ATV metric reflects the differing strategies of the buy button owners. Amazon and PayPal, especially through its tie-up with eBay, have targeted the long-tail of small and micro online sellers. Conversely, card schemes have targeted their traditional sellers for acceptance; these tend to be medium-to-larger merchants. Such merchants also tend to have more visitors and more sales. So, it could be a case of customers who spend more, spend on cards. Rather than customers who have cards, spend more.
A survey of international buy buttons naturally does not consider popular domestic solutions. Payment habits are strongly national. They have developed over time and are formed by various cultural, political, economic and technological factors. Consumers and businesses rarely go out of their way to pay in a new way either face-to-face or online.
The growth of e-commerce is driving take-up of local alternative payment methods (APMs). There are currently more than 300 APMs worldwide, ranging from real-time bank transfers and e-wallets to direct debits, cash on delivery and e-invoices. These are the default way to pay in many countries, such that the term ‘alternative’ seems a misnomer.
APMs are becoming more and more important for both in-country and cross-border e-commerce. For example, iDEAL, the real-time, online bank transfer payment method offered by the Dutch banking community, had a 56% share of Dutch e-commerce in 2015. This APM is also available outside the Netherlands — 20% of iDEAL transaction volume was generated at non-Dutch websites.
Internationally-branded buy buttons and cards are not the most common way to pay in all countries. More than 40% of European e-commerce transactions are made with an APM, according to e-payment specialist PPRO. This is projected to rise to 59% by 2018. Similarly, 55% of e-commerce in Latin American uses an APM; in Asia it is 65%.
When it comes to shopping online, the choice and familiarity of payment methods is critical. So too is speed and convenience. Complexity kills convenience and conversion, or so the old e-commerce adage goes. However, there are big changes afoot for online payment and other transactions in Europe.
The European Banking Authority has tabled draft regulations affecting online payments. The regulatory technical standard (RTS) stipulates strong customer authentication for all electronic transactions, with few exceptions. This means that consumers must authenticate transactions with two or more of the following: something they know, something they have and something they are.
At the time of writing, the European Commission had yet to make the final decision on the text of the RTS, and to adopt the standards as a delegated Act in the Official Journal of the EU.