More on the Alternative Payments Threat to V/MC Duopoly

Card brands, issuers to lose USD 345 million in volume in 2010 in favor of alternative payments

A study focusing on the market value gained by alternative payments indicates that these type of payments threaten to take away almost $345 million in potential transactions from card brands and issuers by 2010. This volume is expected to grow to $1.7 billion by 2015.

Presently, alternative payments represent 15 percent of the total e-commerce volume. Nevertheless, they could become a threat to traditional payment methods by making higher value proposition to buyers and they are already focusing on offering higher value than payment cards, the study suggests. Despite their dominance and wide acceptance, payment cards have serious weaknesses. The most important one is security, since 40 percent of consumers are reticent when it comes to revealing credit card information on the internet.

The study also reveals that every time a bank account is debited via ACH instead of a card, the card industry loses from 1.5 to 2.4 percent of the transaction size.

The 'Alternative Realities: The Commoditization and Allure of Alternative Payments' study was conducted by Celent.

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