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"Alternative" Payments Dominate E-Commerce

A report from Javelin Strategy & Research finds that most who shop online use non-bank payment methods.

More than 80 percent of online shopper have used an "alternative" payments service -- such as PayPal Amazon Payments, or Google Wallet -- over the past 12 months, according to a recently released report from Javelin Strategy & Research.

The report, "Online Retail Payments Forecast: 2013-2018" also found that platforms that were once exclusive to e-commerce are moving into physical stores. PayPal is now an accepted payment method at 18,000 physical stores (representing 23 retailers total), relying on a cloud-based payment system where consumers can complete transactions using a PayPal card or a PIN code. Amazon is also looking to make the jump to brick-and-mortar payments, with early reports indicating that Amazon is looking to offer a digital wallet in conjunction with its Kindle tablets and credit card processing technology, notes Javelin.

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"It is no surprise that Amazon is following PayPal's example by entering the brick-and-mortar space, as PayPal is the far-and-away leader of alternative online payments," said Nick Holland, Senior Analyst of Payments at Javelin Strategy & Research, in a statement. "For mainstream e-commerce players, the hybrid approach of online and brick-and-mortar presence will be critical for success. Consumers continue to prioritize the experience of shopping, leading to ultimate brand loyalty and overall convenience."

Overall, the report found that the e-commerce market is growing at a rapid rate, with consumers spending a total of $351.9 billion online in 2013.

[Related: "Killer App" Will Drive Widespread Mobile Payments Adoption]

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

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