Traditional methods of payment for online purchases, such as credit and debit cards, are set to decline steadily over the next five years, according to research by payments company Worldpay reported by Finextra.
In its annual Global Payments Report, Worldpay explained that by 2021 debit card payments are forecast to fall from 31% of the total e-commerce market to 26%, with credit cards and cash on delivery also in decline.
Over the same period, digital wallets are set for strong growth and are forecast to become the most popular method of paying for online transactions, reaching 34%. Also known as e-wallets, these are mobile payment apps that store your payment information on your smartphone for a fast alternative payment method.
The rapid growth of e-wallets will help fuel the m-commerce market, says Worldpay, predicting that the UK m-commerce market will rise at an annual average of 21% over the next five years. That’s faster than China, the US and Japan.
Overall, the e-commerce market in the UK is projected to grow by an average of almost 10% over the next five years, reaching £203bn ($268bn) and making the UK the world’s third biggest market for e-commerce in 2021, behind only China and the US.
Commenting on the findings, Dave Glaser, chief product officer for global e-commerce at Worldpay, said: “The UK is a highly-developed e-commerce market, with a population of over 66 million — 95% of whom have access to the internet. As a result, consumers are comfortable with making a wide variety of purchases online and via multiple devices and payment methods. The predicted rise in both e-commerce and m-commerce is a strong vote of confidence in the security and convenience of the UK’s digital payments infrastructure.
“UK consumers are among the world’s earliest adopters of new technologies, including new payment methods, so retailers need to stay on top of technological and regulatory developments. For example, mobile’s share of e-commerce is set to increase to nearly 50% in the next five years, while smartphones will outpace tablets in the same timeframe. Merchants should therefore invest in developing their own apps to build a seamless shopping and checkout experience for all users, across every device, and support the most popular payment methods.”