As 2015 enters its fourth quarter, credit cards continue to dominate online payments in the U.S. and Canada. But looking at e-commerce around the globe, one finds a diverse payments landscape that also includes everything from direct debiting to direct carrier billing. And for e-commerce, another popular option is e-wallets and the prepaid/preloaded method.
Cathy Beardsley, president and CEO of SegPay, described e-wallets (also known as “digital wallets”) as a major growth area for mainstream e-commerce — although she said that how much more headway they will make on the adult side in the coming years remains to be seen.
Because porn is often an impulse buy, digital wallets have not caught on as much as hoped in the adult industry — and not in mainstream either. However, micropayments have surely increased in popularity as well as the ability for merchants to offer tokens and to ‘bank’ funds.” -Mitch Farber, NETbilling
“E-wallets are the fastest growing form of alternative payments,” Beardsley told XBIZ. “I am not sure if I would call an e-wallet really an alternative payment — it is just an easier way to store more traditional payment forms for checkout. There are wallet service providers, and now, the credit card service providers are introducing their own wallets. However, I do not see a lot of wallets really participating in the adult space. PayPal is the first and is making limited entry into the adult space with their partnership with Epoch.”
On the mainstream side, PayPal remains the leader of e-wallets. The Des Moines, Iowa-based Dwolla, founded in 2008, has been competing with PayPal in the U.S. market — and Dwolla’s supporters like the fact that it doesn’t have the type of transaction fees that PayPal charges for receiving money. But in contrast to PayPal’s global outreach, Dwolla is strictly an e-wallet payment solution for the U.S..
According to Mia Hyun, president and CEO of Mobius Payments, the smartphone explosion has been great for e-wallets in mainstream e-commerce. But she is concerned about some e-wallet providers excluding adult purchases.
“As mobile technology grows, so does the ease in which to make a purchase through a mobile phone,” Hyun told XBIZ. “Originally a system for the unbanked, mobile has now grown to the easiest way to connect to payment networks. Unfortunately, these networks will not allow any sales or purchases that are of an adult nature.
“There are a number of wallet systems that are emerging to service the adult merchants. Mobius Payments will soon be offering an alternative digital platform, which will allow for tap and pay.”
Paxum has been a leader when it comes to the use of e-wallets within the adult industry. Paxum’s main focus has been adult business-to-business transactions rather than consumers paying for porn with e-wallets, and Paxum’s e-wallets have often been used for payments to affiliates, models and others in the adult industry.
Mitch Farber, founder and CEO of the Valencia, Calif.-based payment gateway NETbilling, expressed reservations about e-wallets as a method of paying for porn. Farber told XBIZ: “Because porn is often an impulse buy, digital wallets have not caught on as much as hoped in the adult industry — and not in mainstream either.”
“However, micropayments have surely increased in popularity as well as the ability for merchants to offer tokens and to ‘bank’ funds. NETbilling supports the ability for one-click rebuys as well, which is crucial to be able to capitalize on existing customers and make it simple for re-purchases. ACH is a popular payment method here in the USA. NETbilling’s most successful merchants combine credit, debit and ACH processing for online purchases.”
Rand Pate, director of communications for Epoch, is quite bullish on e-wallets — especially for mainstream e-commerce. Pate told XBIZ: “It’s been widely reported that Starbucks claims over 10 percent of their retail sales are e-wallet transactions, and those numbers are growing in other sectors too.
“In the online world, a majority of e-commerce transactions are moving from the desktop to mobile — and e-wallets are a great fit in the mobile marketplace, as they offer expediency and convenience as well as an additional layer of security.”
Pate cited Europe as a part of the world with heavy e-wallet penetration.
“In our experience,” Pate observed, “Belgium and Germany drive the highest numbers in e-wallet transactions using PayPal, MisterCash and ClickandBuy payment options. Additionally, Epoch also accepts Abaqoos, ePay, Qiwi, and YandexMoney as e-wallet payment options.”
Pate added: “The U.S. weighs in at third place for e-wallet transactions. But that number is still quite significant, as over 17 percent of electronic payments in the U.S. are e-wallet transactions — and their use is expected to grow as merchants continue to look for new ways to increase sales and protect themselves from fraud. By most indications, e-wallets are poised to experience significant growth.”