The rise of the e-commerce economy

·22 Feb 2014

The e-commerce economy is growing at a rapid pace with a significant increase in global online transactions, according to new data compiled by WorldPay, the payment service provider.

In 2012, the total global e-commerce market was worth $1.7 billion. WorldPay estimates by 2017 alternative schemes will overtake cards for products and services purchased online, with alternative payments accounting for 59% of all transactions.

The group defines alternative payments as online (real-time) bank transfers, direct debits, e-wallets, and mobile, either direct carrier billing or mobile wallet, and cash on delivery.

WorldPay said that 17% of global online transactions were made using e-wallets in 2012, replacing that of debit and credit cards. It said that online transactions through e-wallets will rise to $1.7 billion in 2017, comprising 41% market share.

The value of mobile transactions will increase from $18 billion in 2012 to $117 billion by 2017, the payments company said.

In 2012, Middle East and Africa had a 1% share of the global e-commerce market, of which the majority of transactions were cash payments.

“That being said, 5% of e-commerce transactions were made with e-wallets in 2012, which shows promise for uptake of alternative payments in this region,” WorldPay said.

In South Africa, e-commerce has been rising as a proportion of gross domestic product, accounting for 0.31% of the economy in 2012 and perhaps reflecting the broad population, the payments landscape is fragmented.

WorldPay noted that many South Africans don’t rely on the banking sector for making payments: card use is low at 37.5%, with bank transfers accounting for just 5.2% of transactions, most taking place offline.

At present the bulk of payments (39.6%) are via cash-based offline methods, with cash on delivery accounting for most of those payments at 37%.

Mobile however, is popular, with 13.3% of payments made in this way, mostly (11.1%) via direct carrier billing. “E-wallets do not have much of a foothold yet, with just 3.9% of payments being made in this way,” the group said.