February 20, 2008 (updated February 27, 2008)

Why Consumers Like Alternative Payment Methods When Shopping Online

by Sucharita Mulpuru

with Carrie Johnson, Scott Wright

Executive Summary (This is a document excerpt)

Seventy-four percent of online shoppers who have seen or heard of alternative online payment services report having used methods like PayPal, Bill Me Later, or Google Checkout during recent Web shopping experiences. Although a growing number of retailers offer alternative payment methods at checkout because they can help drive conversion and lower overall transaction costs, consumer acceptance is likely to be a more significant driver of growth. PayPal laid the groundwork by familiarizing many online consumers — primarily eBay buyers and sellers — with alternative payment methods, and other payment providers soon followed. By providing greater convenience and choice than credit cards, and appealing to new customer segments like non-credit card holders, alternative payment methods benefit both online consumers and the retailers that cater to them.

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