The eBay-owned PayPal has established itself as a forerunner in the field of online payment systems, with other competitors such as Google Checkout still establishing themselves in the sector. While they may not be as popular an option as simply paying with credit cards, online payment services still account for a significant amount of ecommerce activity.

According to a recent Forrester Research report, that figure will continue to grow, albeit marginally. As of 2012, approximately one-fifth of online retail sales are conducted through services such as PayPal. By 2016, that number will climb 3 percent to 23 percent, with online payment services accounting for $110 billion by then.

For PayPal and its rivals, though, the bulk of growth won't happen through traditional ecommerce platforms. Rather, Forrester expects many of these companies to realign focus for mobile devices, such as smartphones, where they can have a larger impact on a still-developing payment landscape. Whereas PayPal is beneficial on a retail website, the company is aiming to become a necessity for mobile shoppers.

Retail merchants regularly see an increase of no more than 10 percent after adding alternative payment methods – such as PayPal – to their ecommerce websites. Therefore, the often prioritize other features, such as new social elements, that may have a bigger impact on their bottom line. However, if PayPal can establish itself as a mobile payments powerhouse, it may see more universal adoption. 

"With growing mobile commerce though, adding alternative payment options for smartphones and tablets may prove more worthwhile for retailers than adding them to web sites. Sixty-five percent of experts believe most consumers will trust and almost fully rely on mobile devices for paying in stores and over the Internet by 2020," Internet Retailer adds, citing data from a separate study conducted by the Pew Internet Project.

Mobile reach

PayPal is positioning itself as a meaningful mobile payments solution as well. For example, PayPal Mobile Express Checkout enables users to bypass laborious form-filling and quickly purchase their goods – a key feature for reaching on-the-go shoppers.

Separate data from comScore notes that more than 100 million Americans have smartphones, many of whom browse the web or use apps. For both retail merchants and payment providers, this growing audience will be pivotal to the success of any mobile commerce initiatives.

This entry was posted by Retail Pro on Tuesday, May 22nd, 2012 at 9:38 am .