E-Commerce Settles for Established Payment Systems: Limited Market Potential for Innovative Payment Systems

Abstract

Traditional payment systems continue to dominate B2C e-commerce. A host of innovative payment systems are pushing into the market. However, these systems often have a limited focus on niche segments. The only ones with massmarket promise are those innovative systems that take into account the particular features of B2C e-commerce, enjoy the support of established e-shops or service providers in payment transactions and can convey the unique added value that they offer. Some innovative payment systems fail to address the typical business situation in B2C e-commerce. Numerous systems are only geared to settling micro-payments, but most e-shops do not ever charge such small amounts. In addition, innovative mobile payment systems advertise the advantages of their portability. However, this trump cannot be played in a typical online situation. Payment systems operate in an intensively regulated, complex market environment. Policy and regulatory frameworks even outside the financial sector have a sustained influence on the market potential of payment systems. The net effect of political decisions on payment systems is not clear a priori. Given the substantial administrative expense involved, however, we believe that government regulation limits the potential of the small innovative systems in particular.

Factors Determining the Acceptance of Payment Methods by Online Shops in Poland

“…Analyses of innovations in the field of payment services in the last 20 years have clearly shown that on-line payment systems have provided more solutions than those used in local Points-of-Sale (OECD, 2006;Heng, 2007;Chande, 2008). On the one hand this results from considerably varied payment needs of Internet users, but on the other hand it stems from relatively low costs of online payment systems, owing to which niche solutions can function (Heng, 2007).…”

“…Analyses of innovations in the field of payment services in the last 20 years have clearly shown that on-line payment systems have provided more solutions than those used in local Points-of-Sale (OECD, 2006;Heng, 2007;Chande, 2008). On the one hand this results from considerably varied payment needs of Internet users, but on the other hand it stems from relatively low costs of online payment systems, owing to which niche solutions can function (Heng, 2007). Low costs needed to introducing them into the market result from the fact that online payment does not require the development of a dedicated national-wide network of acceptance in local Points-of-Sale (Levitin, 2007) as it uses the already existing and universal infrastructure of the Internet.…”

“…Since banks enjoy public trust and deal with millions of customers in traditional distribution channels, they find it relatively easy to win the trust of Internet users (OECD, 2006;Heng, 2007). Consequently, many customers who appreciate security will opt for payment services offered by banks, especially that in most cases the cost of the service for the customer is low.…”

Choosing Between Innovative and Traditional Payment Systems: An Empirical Analysis of European Trends

“…The choice of payment methods has flourished and this was fostered by the requisites of efficient payment services to complement e-commerce (OECD, 2006), the globalisation trend which has significantly altered financial market structures (Camilleri, 2006), and the tendency for the novel payment systems to use readily available infrastructures such as internet and mobile phones (Levitin, 2007). These trends have resulted in increased competition in this sector, as non-bank entities offering different kinds of retail payment methods stepped in to compete with financial institutions (Heng, 2007). While the latter enjoy substantial goodwill, the payment systems offered by non-bank providers tend to be more straightforward in the sense that they do not involve the burdens associated with opening a http://www.open-jim.org http://creativecommons.org/licenses/by/3.0 bank account (González, 2004).…”

Comparative Analysis of e-Commerce Between China and Uzbekistan.

“…Smart phones can now be linked to bank cards for sales purchases. This method of payment for both the seller and the buyer is more convenient than a plastic bank card [21].…”