February 3, 2005, 12:00 AM

Where the small, but growing market for alternative payments is heading

While credit cards will continue to dominate online payments through 2009, the use of alternative forms of payment such as gift cards, deferred billing and stored value accounts will also increase, according to a new report from Jupiter Research.

Kurt Peters

Executive Editor

 

Credit cards will continue to be the dominant method of payment for online consumer purchases through 2009, but the use of alternative forms of payments such as gift cards, deferred billing and stored value accounts will also increase, according to a new report from Jupiter Research.

In its most recent online payments forecast, Jupiter says alternative payments will most likely be used by consumers taking part in online auctions such as the type offered on eBay and other sites. “Consumer-to-consumer auction payments will continue to represent the largest use of alternative payments due primarily to the dominance of PayPal for eBay and other online auction transactions,” the report says. “Consumers will use alternative payments for 74% of the nearly $19 billion in U.S. auction payments that Jupiter forecasts through 2009.”

While alternative payments won’t replace the majority of online card transactions any time soon, there are certain merchandise segments where they will dominate, Jupiter says. “There are specific types of content for which alternative payments will represent notable volume and experience significant growth over the coming five years,” the report says. “These include wireless content, online games and online media/entertainment.”

Jupiter says about 90% of wireless content purchases by 2009 will be made with an alternative payment. “The vast majority of wireless content purchases will be accumulating balances,” Jupiter says.

 

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