Payment in E-Commerce Internet Payments from the Perspective of Retailers and Consumers (IZ 2013)

Transcription

1 Payment in E-Commerce Internet Payments from the Perspective of Retailers and Consumers (IZ 2013) A summary of the study by ECC Cologne about the online payment market in collaboration with the Aschaffenburg University of Applied Sciences With selected country comparisons! With the friendly assistance of AG einfach sicher zahlen

2 Payment in E-Commerce (IZ 2013) Management Summary The use of a consumer-friendly payment method is one of the key factors in the success of an online store. From the consumer perspective, the availability of preferred payments method in an online store is one of the most important criteria of online shopping. 1 Similarly, the results of this study point out the importance of the right combination of payment methods for online retailers: Almost 20 percent of the online shoppers cancel their purchase if a shop does not offer their preferred method, and another 67 percent consider a purchase cancellation depending on the alternatives. Based on these premises, the ECC Cologne has investigated internet payments from the perspective of consumers (IZV) and of retailers (IZH) since 2001 as part of the IZ study series (IZ Internet-Zahlungsverkehr [Internet payments]). With the study Payment in E-Commerce Internet Payments from the Perspective of Retailers and Consumers (IZ 2013), the perspectives of consumers and retailers are analysed and compared in a single study volume for the first time. The study was based on an anonymous online questionnaire of 1,970 Internet users from Germany, Austria and Switzerland (September 2013) and of 901 online retailers from Germany (September to November 2013). The study focused on the one hand, on usage habits and assessments of payment methods by Internet users and, on the other, payment processes offered by retailers and their assessment of these processes. In particular, the following questions were posed: Which payment methods are offered by online retailers and used by consumers? What are the criteria for online retailers to choose their payment mix? Which requirements do online shoppers have of payment methods? How do online retailers and online shoppers assess individual payment methods? Which risk management measures do retailers use and how do their consumers react? How do the preferences and payment habits of consumers in Germany, Austria and Switzerland differ? 1 Groß, Svenja; Tischler, Anke, Eckstein, Aline: Erfolgsfaktoren im E-Commerce Deutschlands Top Online-Shops Vol. 2, ECC Köln, Köln,

3 Management Summary The following payment methods were considered in the study: Table 1: Payment methods considered in the study. (The alphabetic list shows the payment methods inquired in the questionnaire.) Payment Method Payment Method Advance payment Amazon Payments Cash on delivery Cash payment when collecting goods in-store ClickandBuy Credit card Direct debit eps online transfer giropay Google Checkout Invoice (payment upon delivery) PayPal PostFinance E-Finance POSTPAY Pre-paid cards (e.g. Cash-Ticket, paysafecard, Geldkarte) SOFORT Überweisung Finance/instalment plan ECC 2013 This Management Summary provides an overview of selected results. PayPal as a compromise between consumer-friendly invoice and retailer-friendly advance payment The top three payment methods offered by German online retailers are advance payment, which was again able to defend first place, PayPal, which was again able to defend second place following a rapid rise through 2011, and SOFORT Überweisung, which again significantly expanded its prevalence. On the consumers side, the invoice leads the top three of the best-known and most-used processes, direct debit is second and PayPal runs third. The top 8 payment methods already used by German consumers and those offered by the retailers are apart from isolated changes in ranking identical. All in all, the traditional payment methods (invoice, direct debit, credit card, advance payment and cash on delivery) remain very prevalent, despite gains made by Internet-specific payment methods. In Austria and Switzerland, credit card and invoice are most commonly offered these are also the two processes that most consumers have already used for the payment of online purchases. 3

4 Payment in E-Commerce (IZ 2013) In Germany, consumers most commonly use PayPal for online purchases, in Austria and Switzerland the credit card With regard to usage frequency of payment methods on the consumers side, 2 results show that PayPal is most frequently used in Germany with an average value of 28.2 percent, and thus ranks ahead of the consumer-friendly invoice (25.0%, cf. Figure 1). Even if the invoice is the payment method previously with the highest degree of prevalence, usage loyalty is currently higher for PayPal. At 20.6 percent, the credit card ranks just behind the invoice. The country comparison again shows the particular popularity of the credit card in Austria and Switzerland: In Austria, this payment method by far ranks on the first place (37.5%) of the payment methods with the highest usage frequency, in Switzerland, the credit card (37.3%) holds second place just behind the invoice (37.3%). Figure 1: Top 3 processes in D-A-CH with the highest usage frequency, 205 n 910. Question text: You indicated that you have already used the following payment methods. Please indicate the percentage of how often you used these payment methods during the last twelve months % 37.3 % 34.6 % 28.2 % 25.0 % 24.9 % 20.6 % 20.5 % ECC % Invoice PayPal Credit card Invoice Credit card PayPal Credit card Invoice PostFinance E-Finance 2 Number of purchases independent of amount. Consumers were asked to distribute 100 points to the payment methods they had already used so as to reflect their usage frequency during the last twelve months. 4

5 Management Summary Discrepancy between usage preferences of shoppers and methods offered by retailers The invoice places first amongst payment methods most preferred by online shoppers ( Which payment methods do you preferably use or would you like to use preferably (irrespective of how often they are offered)? ), PayPal and direct debit follow in second and third place. The comparison of these consumer preferences payment methods offered by retailers shows that at least in Germany there is a certain discrepancy (cf. Figure 2). For example, advance payment is the process with the greatest prevalence on the retailers side, but only one in eight consumers indicated a willingness to pay in advance. Consumers, on the other hand, would prefer the invoice almost 80 percent select the invoice as one of their top 3 preferred processes while merely just a little more than one-half of the online retailers offers the invoice process. It is similar with the direct debit: This makes it under the top 3 of the preferred consumer processes, but is only on place eight amongst online retailers. PayPal is the only method where offer and demand are the same to the greatest extent. PayPal holds second place both amongst processes preferred by consumers and offered by retailers. Figure 2: Comparison of preferred consumer processes and those offered by retailers, 878 n 971. Question text: Consumers: Which of the following payment methods do you prefer to use or would you like to use preferably (irrespective of whether they are offered)? Please choose your three favourite processes ; Retailers: Which of the following payment methods do you offer? 12.4 % Advance payment % 62.4 % 2 PayPal % 19.5 % SOFORT Überweisung % 79.1 % 1 Invoice 57.6 % 15.7 % Cash upon collection 54.7 % 35.3 % Credit card 49.7 % 9.1 % Cash on delivery 47.7 % 48.1 % 3 Direct debit 40.7 % Preferred payment method (places 1 to 3) ECC 2013 Offered by retailers In contrast, offer and supply are largely the same in Austria and Switzerland. In particular the wide prevalence and high level of acceptance of the credit card both among retailers and consumers is striking here. 5

6 Payment in E-Commerce (IZ 2013) Mobile purchases are most frequently paid by PayPal in Germany, by credit card in Austria and Switzerland German online shoppers prefer PayPal for orders via smartphone: About 41 percent of consumers who already made mobile purchases used PayPal as payment method (cf. Figure 3). The direct debit ranks second with 26 percent, followed by the invoice (24.9%), which previously had the best result for online purchases in general (mobile and via laptop/pc). PayPal in Germany thus has greater significance for purchases via smartphone than for online purchases in general. In Austria and Switzerland the preferences are similar to those for online purchases in general. Once again, the credit card ranked highest here: Almost 45 percent of the Austrians who already had ordered via smartphone had used the credit card in Switzerland the figure was nearly 50 percent. In second place in Austria are PayPal with 28 percent and in Switzerland the invoice (33.3%). Figure 3: Usage of payment methods for payments via smartphone, 98 n 225. Question text: Which payment methods have you already used for online purchases with your smartphone? PayPal 11.1 % 27.6 % 41.3 % Direct debit 2.0 % 15.3 % 25.8 % Invoice 21.4 % 24.9 % 33.3 % Credit card 22.2 % 44.9 % 49.5 % Amazon payments 4.1 % 8.9 % Advance payment 5.1 % 5.1 % 7.6 % Germany Austria Switzerland SOFORT Überweisung 3.6 % 3.0 % ECC % Consumers use the invoice for tangible goods and the credit card for services When investigating payment methods used by type of good, it can be seen that the credit card is used in all countries primarily for the purchase of services such as travel or flight and rail tickets, but also for digital goods, whereas the invoice is mainly used for the purchase of tangible goods (cf. Figure 4). For tangible and digital goods, PayPal is also especially prevalent. 6

7 Management Summary Figure 4: Usage of payment methods by type of goods, 140 n 1,306. Question text: Which payment method did you use for your last online purchase? and Which type of goods did you buy during your last online purchase? Services are paid by credit card Tangible goods are paid by invoice and PayPal 50.0 % Digital goods are primarily paid with PayPal but by credit card as well 32.9 % 25.1 % 20.4 % 28.6 % 26.6 % Direct debit still in the double-digit range for tangible goods 12.1 % 13.6 % 10.2 % 10.0 % 6.4 % 5.5 % Invoice Credit card PayPal Direct debit Tangible goods Digital goods Services Consumers and retailers make high demands on payment methods The security of a process, the reputation of a provider and data protection are in all countries of very high importance for choosing a payment method on the consumers side. All criteria under consideration are at least very important for almost half of the consumers a fact that illustrates the high demand placed by Internet users on security, costs, trust, prevalence and user-friendliness of a process. For online retailers, payment security is the most important criterion for choosing a process, followed by the consumer-friendliness and the costs of a process. Speed of payment also has a large influence on a retailers choice of a payment method. The international acceptance of a process and the probable effects on the rates of return after implementation of a process play a comparatively tangential role, whereas they are still at least very important for more than half of the retailers. 7

8 Payment in E-Commerce (IZ 2013) Consumers assess the invoice most highly, retailers the advance payment When evaluating the most common payment methods across all countries, the invoice has by far the most positive assessment profile from the consumer perspective compared with all other processes. Furthermore, those surveyed evaluated PayPal especially well, but with a reduction in marks for the additional costs and the data protection compared with the invoice. The credit card is evaluated similarly positive compared to PayPal; those surveyed merely perceive it as slightly worse in terms of security and refund possibilities. Cash on delivery and advance payment receive the worst assessment by consumers surveyed. Figure 5: Comparison of payment method assessments retailers vs. consumers, 878 n 971 (consumers), 800 n 818 (retailers) (Scale from 1 = Very poor to 5 = Very good ; Illustration of the assessment of the nine most common processes in Germany from the perspective of retailers and consumers). Question text: How do you evaluate the following payment methods overall? Advance payment Finance/ instalment plan PayPal Direct debit Cash upon collection 1 2 SOFORT Überweisung 3 4 Invoice 5 Credit card Cash on delivery ECC 2013 Consumers Retailers From the retailers perspective, advance payment is ranked most highly (52.1% very good ) in the question of an overall assessment, PayPal ranks second (45.0% very good ), but direct debit and SOFORT Überweisung also received good marks (cf. Figure 5). A similar assessment of cash payment upon collection by consumers and retailers furthermore shows potential for a common denominator in the cross-channel context. 8

9 Management Summary In the detailed assessment, advance payment is rated highly by retailers in particular due to high payment security levels, low costs and low integration effort. It is also the most highlyassessed process with regard to the effects on rates of return. Both internet-specific payment methods PayPal and SOFORT Überweisung were able to earn good marks primarily as a result of fast payment times and received positive marks with respect to payment security. Amongst online retailers, PayPal is seen as very consumer-friendly and thus joins the invoice in front of all other methods. The invoice demonstrates the most heterogeneous assessment profile. Although it is assessed as very consumer-friendly, it simultaneously receives the worst marks amongst payment processes with respect to payment security, impact on rates of return and speed of payment. With regard to the criteria subject to analysis (payment security, consumerfriendliness, costs, etc.), from the retailer perspective there is apparently no process that is superior or inferior to the others in all aspects. Thus, each process has its own strengths and weaknesses which must be considered in relation to each other. This is likely one reason for the circumstance that, with on average 5.5 payment processes, online retailers continue to offer a broad range of payment methods and intend to further expand their payment mix in future. INFO ABOUT THIS STUDY For the first time, the long-standing series of studies on Internet Payments (IZ), with its two complementary surveys IZV (Internet payments from the consumer perspective) and IZH (Internet payments from the retailer perspective), were combined into one volume this year: The study Payment in E-Commerce Internet Payments from the Perspective of Retailers and Consumers (IZ 2013) examines, amongst others, the acceptance/prevalence and assessment of online payment processes in the German, Austrian and Swiss markets and compares the demands of consumers to what is being offered by online retailers. The results were based on an anonymous online questionnaire of 1,970 Internet users from Germany, Austria and Switzerland (September 2013) and of 901 online retailers from Germany (September to November 2013). The study IZ 2013 represents a joint project between the ECC Cologne and the Aschaffenburg University of Applied Sciences. In addition, the study is primarily supported by the following companies and institutions: BillSAFE, EXPERCASH GmbH, Klarna GmbH, PayPal, SOFORT AG, secupay AG and Wirecard AG. We thank these sponsors very much for their many years of support of empirical economic research without them it would not have been possible to complete this research project in this form. Order the study at: shop.ifhkoeln.de or from Ms Vesta Grell: +49 (0) v.grell@ifhkoeln.de 9

10 Payment in E-Commerce (IZ 2013) WHAT CAN WE DO FOR YOU? INFO For example, as a retailer do you want to know what mix of payment methods is ideal for your consumers or, as a service provider, are you interested in the needs of consumers and retailers and need support in designing new payment processes prior to going to market? In addition to publicly-available studies, ECC Cologne can create tailored analyses for you as well. Please contact us and we would be happy to prepare a no-obligation offer for you! Your contacts at the ECC Cologne for issues surrounding payments Maria Klees Project Manager ECC Cologne m.klees@ecckoeln.de T +49 (0) Svenja Lambertz Project Manager ECC Cologne s.lambertz@ecckoeln.de T +49 (0) Your contact at the Aschaffenburg University of Applied Sciences for issues surrounding payments Prof. Malte Krüger Professor at the Aschaffenburg University of Applied Sciences malte.krueger@h-ab.de T +49 (0)

11 Management Summary Core competences of the ECC Cologne Online experts at the IFH Institut für Handelsforschung GmbH (Trade Research Institute), Cologne Research and consulting Commissioned projects, studies, whitepapers, events/presentations Areas of focus: cross-channel, payment, mobile, success in e-commerce Selected Studies of the ECC Cologne Lambertz, Svenja; Eckstein, Aline: Erfolgsfaktoren im E-Commerce Deutschlands Top Online-Shops Vol. 3, 3. Ausgabe 2014, ECC Köln, Köln, 2014 (ISBN: ) Halbach, Judith; Eckstein, Aline: Das Cross-Channel-Verhalten der Konsumenten Herausforderung und Chancen für den Handel, ECC Köln, Köln, 2013 (ISBN: ) Hudetz, Kai; Duscha, Andreas; Strothmann, Sonja; Pöpplow, Marc: Das Informations- und Kaufverhalten von Geschäftskunden im B2B-Multi-Channel-Vertrieb, ECC Köln, Köln, 2012 (ISBN: ) Eckstein, Aline; Halbach, Judith: Mobile Commerce in Deutschland Die Rolle des Smartphones im Kaufprozess, ECC Köln, Köln, 2012 (ISBN: ) Orders of the studies and further information at shop.ifhkoeln.de or from Ms Vesta Grell: +49 (0)

12 Study sponsors AG einfach sicher zahlen