Only 55% of Web Purchases Made with Credit Cards

What are the other 45% made with?

[stajer]

I just read an article from a well known and respected e-commerce trade publication. The article talked about how reduced credit card limits may have reduced web spending during the holiday season.

The article mentions that credit cards only account for 55% of web purchases. What are people using for the other 45%?

For us, 90%+ is credit card with the rest on EFT. Anyone have significant paypal or google payments rates? What payment methods are we missing?

[Quadrille]

Paypal accounts for a much bigger portion than you'd expect; Google checkout and others add a bit.

Whether they suit you depends on what you are selling, but they're great for small purchases. And they add up.

Don't forget money orders and used greenbacks ;)

[added:] also, an increasing number of shopping sites allow registered customers to spend straight from their bank accounts, either direct or via debit cards.

And there's those dreadful 'cashcard' things, where people with no credit card can pay a fee for the card, a fee to top it up, a fee to spend their own money, a fee to get their own cash back, and a fee for breathing God's Own Air).

[edited by: Quadrille at 12:39 am (utc) on Jan. 21, 2009]

[stajer]

I have thought about offering a "pay with cash" option to people who select "will call" as their shipping option. They would just pay when they come to our warehouse to pickup their product. But, I have a big problem as it is with people using us a free storage (we offer a collectible item - they buy, pay and ask us to hold the item until they are ready to pick it up, sometimes years later). I am worried a cash option would result in a lot of unpaid orders.

[sun818]

eCommerceTimes was saying 1 out of 3 prefer Paypal. The other 66.6% must use some form of credit card, Google Checkout, eCheck, paper check, cash, Bill Me Later, etc.

[stajer]

Why do you think paypal is so popular? Some people have balances with paypal that they need to spend. Some people who have never heard of your website trust paypal so it encourages them to place their first order with you. What else?

What about echeck? Is anyone doing significant volume? Any problems with returned checks?

[peterdaly]

If it includes eBay, that's probably almost all PayPal payments.

[Wlauzon]

PayPal is not just PP, you can also use it for e-checks.

And I wonder if that counts just credit cards, or debit cards also. I have no personal credit cards, but my debit cards look and act just like a CC, so wonder how that shows up in the stats.

[Quadrille]

Debit cards have a different merchant fee structure (at least in the UK), so thy should be separated out in the stats. Doesn't mean they are, though!

[stajer]

The fee structure for debits cards is much cheaper than credit cards. But I don't think you can accept a debit card through the web. It gets processed as a credit card and the merchant gets charged credit card fees. Right now you are not allowed to ask for a PIN via the web.

[HugeNerd]

A related side note: Amazon.com ceased accepting payment by Bill Me Later effective 12/31/2008. So, maybe that service will die soon?

My site only accepts credit cards, by design. However, we use telecheck services and can release orders paid by check immediately, as the funds are guaranteed by the telecheck company. The VAST majority of customer and potential customers I deal with prefer paying by card -- though this may be because we state, rather clearly, at several points on the site that the only way to process an order without calling is with a credit card.

I'd be interested to see the percentages for Google Checkout as I am operating under the impression that this Google service is somewhat of a flop.

But I don't think you can accept a debit card through the web. It gets processed as a credit card and the merchant gets charged credit card fees. Right now you are not allowed to ask for a PIN via the web.

I'd never really thought about that -- I use my debit card to purchase online all the time and never really considered that I don't input my PIN. I mean, I realized I was using the 'credit' function of the card, but never consciously recognized the lack of PIN in the transaction and how this would affect transaction fees.

[Wlauzon]

I think the PIN on a debit card is basically the same merchant fee as a "card present" or card with the CVV number. Looking at our last bill, it does seem that in-store debit cards are cheaper for us than the online ones to process.

[stajer]

Accepting a debit card in-store where the customer types their PIN into a keypad gets you rates of flat 25 to 50 CENTS with no discount fee. The reason is there is no risk of non-payment - funds are wired instantly out of the customer's bank account to your merchant provider.

Swiping a debit card without getting the customer to type in the PIN will just get you the card present discount rates.

Has anyone implemented the VISA program where the cardholder is sent to visa.com during checkout to enter payment? I have used it once buying tickets online - it was very cumbersome, but I wondered if the merchant got better rates.

[Quadrille]

My sites are but babes among giants - but I have 50% of sales by Google checkout (the only alternative being Paypal) - and I find GC easier to manage.

And I hope to increase that ratio!

[pbradish]

In the past year, we've had 83% of our orders come in through Credit Card. The other 17% include Paypal, Google Checkout, & Money Orders.

[kasegu]

Possibly cash and other services like paypal.

[jecasc]

In many European countries bank-transfer and here in Germany direct debit is the dominating form of payment. Credit card is only about 25% in my shop.

I think bank-transfer will increase further in importance in Europe with the introduction of the Single European Payments Area and new services like online bank-transfer with Instant Notification (like Giropay).

I have always been wondering why most US shops do not accept bank-transfer as payment. I mean: Recalling a bank-transfer is nearly impossible, its the safest way of payment and there are no or only small fees when accepting bank-transfer payments. (At least when you instruct your customers correctly how to do the payment. OUR or SHARE not BEN)

And nearly everybody nowadays has an online banking account and can do the payment immediately from the computer.

[farmboy]

The article mentions that credit cards only account for 55% of web purchases. What are people using for the other 45%?

I have a PayPal debit card that I use online just like a credit card. The money comes straight from the balance in my PayPal account.

I wonder if that's counted as a credit card purchase or in the other 45%?

FarmBoy

[stajer]

For me the underlying question is are we losing sales by not accepting paypal, google checkout and echecks. Right now we accept visa, mc, and amex. Paypal's developer documentation claims the average e-commerce operation increases sales 14% by accepting paypal. I am going to implement the new methods and see if I can determine a growth rate. I will report back when I have enough data.

[sun818]

eChecks are over rated. The last two fraudulent transactions were from electronic check.

[T_Miller]

I posted our payment method percentages from 2007 in another thread asking about adding PayPal and they mirrored that report.

Our 2008 numbers changed a little:

Credit Cards: 62%
Google Checkout: 4%
PayPal: 34% (89% of these used "PayPal Express" which bypasses our normal checkout page)

[aspdaddy]

16-18 yr demographic use debit cards and paypal as they cant get credit cards.

I use my debit card to purchase online all the time

You really shouldnt do that, thats a direct link your your bank account and you have no way of doing a chargeback and no protection from the bank. Thats why its only 40p for a debit card transaction.

For me the underlying question is are we losing sales by not accepting paypal, google checkout and echecks.

I would think so with PAypal & Google, but not many people would trust eChecks

[Quadrille]

The more options the better, provided you can offer them safely - and without your site looking like a downtown bar!

How you offer them makes a big difference; since I made Google checkout more prominent, and Paypal less so, their shares have changed accordingly; many of my checkout users are 'first timers'!

[mark_roach]

85% of my customers pay by credit or debit card online. The other 15% pay by cash or cheque through the post.

I also get plenty of people asking to ring me with their credit card details as they don't want to enter their details online.

I suspect my demographics are not the norm, however there are still plenty of people who would rather use old fashioned methods of payment.

[piatkow]

Taking advertising copy for a regional listings magazine I can't get rid of the paper chase because most advertisers are clubs which don't get cards with their bank accounts. (I actually give as discount for card payment despite the bank charge because it cuts out so much admin)

[Digmen1]

I like the idea of offering the facility of direct credit from the purchasers bank account.

Just about everyone has online banking these days.

The only disadvantage is that it only works in the country you are in. So unless and until it becomes popular in the USA it is not really an option for many sites.

We are based in New Zealand, which at 4 million people is only a small market.