PayPal losing market share to BPay and schemes
BPay, Visa and MasterCard seem to be winning the war for the hearts and minds of online shoppers with PayPal and direct deposit losing market share in 2008.More than 800,000 Australians shopped online for the first time in 2008. The vast majority of those new online shoppers used their scheme cards rather than PayPal or direct bank deposit, perhaps encouraged by heavy advertising of scheme debit.Surprisingly, PayPal seems to have lost market share in 2008, despite signing up some major retailers such as Myer and increasing its buyer protection program to $20,000 (for eligible purchases made on eBay.com.au). Direct bank deposit is rapidly falling away as shoppers look to the ease, cross border functionality and the protection of the credit (and scheme debit) cards.The active online shopping population was 7,301,000 consumers in the December quarter, up twelve per cent from 6,485,160 one year ago according to Nielsen Online.More than ninety per cent of online shoppers have used their credit card to pay for purchases, up from 84 per cent one year ago. Perhaps more importantly, 51 per cent of online shoppers report that their credit card is their preferred method of paying for goods and services online.In contrast, PayPal is apparently less popular than it was a year ago, with 55 per cent of shoppers reporting they have used PayPal, down from 62 per cent last year. Twenty five per cent of shoppers say PayPal is their preferred payment vehicle.Direct deposit payments by shoppers have fallen right away, down from 57 per cent last year to 38 per cent this year. Direct debit is also down from 50 per cent to 31 per cent. Just six per cent of shoppers say direct deposit is their preferred payment method and three per cent nominate direct debit.BPay is now preferred by eleven per cent of those people who have ever made an online purchase. Forty-six per cent have used BPay for online purchases.Cash on delivery was up from ten per cent last year to twelve per cent this year.The Nielsen research was questioned by a PayPal spokeswoman who said she wanted to know more about the methodology and the questions asked by Nielsen.Stuart Pike from Nielsen said in an email to The Sheet that the figures are based on recall, not actual transaction data. "The report surveyed 1,022 online consumers and asked them a range of questions. This sample size should be sufficient to give reliable results. We do this same survey every quarter and use the same methodology and same questions."The drop for Paypal and others is either attributable to a bunch of new online purchasers who only use credit cards or some respondents have misinterpreted or misread the question and only referred to their recent experience."Shaun Cornelius, CEO of bank monitor InfoChoice said he was surprised by the Nielsen numbers."I would have thought PayPal and BPay would continue to gain while direct deposit went down. The cards are running debit card campaigns now promoting them for online shopping so that