Traditional payment systems still dominate e-commerce

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While the internet is seen by many suppliers and consumers as a virtual trading platform, payment systems are the ‘Achilles heel’ of e-commerce for the consumer, argues Stefan Heng from the Deutshe Bank Research.

The e-market is taking off due to recent innovative digital technologies, although sales resulting from e-commerce are still relatively small, the study notes. The paper defines e-commerce’s breaches by observing e-shops and e-shoppers’ habits and characteristics and outlines the following characteristics: 

  • The numerous demand of e-shops and e-shoppers concerning payment systems relate to security, information on transaction details, repudiation, transaction costs and speed of transactions; 
  • conflict between the demands of e-shops and e-shoppers, in particular concerning personal data;
  • e-shops do not give enough attention to the development of user-friendly systems – the Deutshe Bank Study finds that 40% of e-shoppers have at some point stopped a purchase transaction because they found the payment system too complex;
  • the numerous innovative payment systems that compete with conventional systems;
  • even if most e-shoppers are unsatisfied with traditional payment systems, they are also reluctant to try innovative methods;
  • e-shoppers’ choices are determined by three criteria: income, age and e-shopping experience;
  • innovative payment systems are being delayed in finding their way onto the market;
  • the establishment of the Single Payment Area will facilitate the development of innovative online payment system, and; 
  • regulatory decisions are a major determinant to the development of new payment systems. 

Payment systems need to be improved, the study finds, to allow e-shops and e-shoppers to exploit the full potential of e-commerce. Moreover, conventional payment systems (invoice, cash on delivery) will continue to dominate e-commerce and leave little room for innovative systems, the author concludes.

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