For anyone looking to be employed within the payments industry a recent article that appeared on the Internet Retailing website, might have made them think that the online payments market was grinding to a halt. The headline read “Online and offline sales slump as consumers less willing to spend”, but the article went onto talk about how online sales had only slowed down; the market was still growing at a eye-wateringly impressive 11.5% per annum.
Now 11.5% is down from those heady days when growth was measured in three-digits, but double digit growth is still something most businesses would give their eye-teeth for. And, while it is tempting to think that online payment is becoming the ugly sister to mobile payment’s Cinderella, the reality is very different.
Of course, all the eye-catching stories are often about mobile payments and how the latest technology is being harnessed in some new way to exploit it. In fact, there is a great deal going-on with online payments as the market gears-up for what are certain to be challenging times ahead.
In the US that bastion of online payments eBay has parted company with PayPal. Although they are still locked together for a fixed period to protect both their interests, PayPal has had to make adjustments since it is now a publicly quoted company in its own right and has to bow to its investors, with no protection from its previously doting parent company.
PayPal recently announced a 30%+ increase in charges for internet merchants that have less than $1.2 million turnover per annum. Such an announcement has not gone unnoticed in the UK and many online businesses are now apprehensive about their future, should PayPal apply the same increase here.
Such a big rise signals a very different attitude going forward, and will be a cause of considerable disappointment to those many online sellers who have remained loyal supporters of PayPal over the years.
PayPal knows it must continue to compete in its traditional markets, while at the same time satisfying its new investors. However, industry observers observe that there is a view within PayPal that believes it has reached a point where merchants who use PayPal have little choice but to continue using it – even when it raises its charges so dramatically.
But PayPal has no room for complacency. The market has seen a plethora of new entrants and all of them really must have a substantial share of the pie to placate their backers. In the past month there have been major announcements by Amazon, Facebook and Twitter, amongst others, indicating that they will not let PayPal play the game entirely in its own way.
Meanwhile, the global card schemes have shown their willingness to put their considerable money where their mouths are, launching their own electronic wallet solutions, and in Visa’s case, deciding to rebrand what was already a very new e-wallet product.
This jostling for position has been driven by the huge rewards at stake to the winners. How this will work out and who will come out on top will take time to unfold, but there can be little doubt that there are to be major implications for anyone employed in or who is looking to be employed within the online payments industry.
This article is from Vol.1 - Issue 6 of the Payments & Cards eMagazine (PCM), you can view the full issue here.
Nochex is the UK’s leading independent online payments company, concentrating on several specialist areas that are challenging spaces for the large internet payments corporations to operate. It has recently become a leader in the provision of payment service solutions to networks operators, where multiple smaller organisations and individuals use the services of a master account holder to leverage competitive advantage. Such networks include websites catering for auctions, advertising, communities, education, markets, sports, clubs, and entertainments. Please visit Nochex at: www.nochex.com
Peter Lyster, CMO, Nochex
With more years’ experience in marketing financial and frontier technology companies than he cares to admit to, Peter is the marketing manager of Nochex, he is a member of the Chartered Institute of Marketing, and happily provides straightforward guidance to many online ecommerce businesses ranging from mid-tier internet retailers through to one-person operated websites.