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.