The Fraud Practice Releases their Semi Annual Guide on eCommerce Alternative Payments


RED BANK, N.J. --(Business Wire)-- Alternative payments represent only a fraction of e-commerce total sales today but according to Javelin Strategy and Research, an independent consultancy focused solely on the financial services and payment industries, about 1/3 of all online retail transactions ($268 billion) are predicted to be alternative payments by 2013. The explosive growth of alternative payments can be attributed to consumer and regional preferences. In these economic times, it is now more critical than ever that e-merchants understand and offer payment choices based on consumer and regional preferences.

When considering alternative payment options, more often than not, merchants are limiting their discussion to ACH, PayPal, Amazon and Google Checkout. In fact, there are a number of payment options and a rapidly growing number of service providers offering them. The Fraud Practice's Guide to Alternate Payments identifies 8 categories of alternative payment solutions with over 100 service providers offering their services globally. The categories include credit card payments, ACH & bank payments, payment aggregators, credit-term providers, cash alternative providers, advertising/promotional providers, mobile payment providers and invoicing payment providers.

Not all alternative payment options will produce the same results. Determining the right alternative payment options for your company means evaluating payment options based on regional support, consumer preference, customer base and return on investment (ROI).

Regional Support: There is no one payment option that is equally effective in all regions worldwide. Credit cards are accepted worldwide but while they have dominated the US and Western European eCommerce markets, they have not shown the same dominance in emerging markets such as Africa, South America, Asia and Eastern Europe. In Germany credit cards are present and used, but they are not the preferred payment method.

In these markets a merchant needs to support other payment options otherwise they will be limiting their potential customer base to only a small fraction of the overall population.

Customer Base: The best alternative payment option has little value if the supported customer base isn't large enough to warrant the effort to integrate and support it. Evaluating a customer base should be done on two levels, potential and current. Consider China, 93% of the 1.3 billion person population has access to direct debit while according to China Daily there were just over 100 million credit cards in circulation in China as of June 2008.

Return on Investment (ROI): The reasons why a merchant may implement alternative payments vary from access to markets, cost reduction, easier supportability to consumer preference. In a majority of cases, merchants are able to show a favorable ROI on integrating alternative payments in a timeframe that is more tactical than strategic. This is primarily attributed to increased sales from new consumer populations, lower costs than traditional credit cards and better fraud protection.

The Fraud Practice has created the Guide to Alternate Payments (http://www.fraudpractice.com/altpay.html) to help merchants, service providers and financial institutions make more informed decisions on which alternative payment solutions and providers they should be considering. A Guide to Alternative Payments is a prepared research document, 60 pages in length, intended for organizations looking to gain an understanding on eCommerce alternative payment options. The Guide also includes easy-to-understand reference tables on regional service providers (over 100 service providers), preferences and capabilities. Readers should expect to gain: An introduction to the types of solution options available and the service providers that offer them An in-depth understanding of the market dynamics, vertical market preferences, regional preferences and reasons to implement these services A discussion on emerging markets where alternative payments are flourishing A general introduction to the capabilities and services provided by the major players in each of the 8 solution option groups Merchants may also consult The Fraud Library, which contains valuable information for merchants seeking information on fraud prevention techniques and eCommerce payments.

About The Fraud Practice The Fraud Practice (http://www.fraudpractice.com) is a privately held US LLC based in Red Bank, New Jersey. The Fraud Practice provides consulting services on eCommerce payments, fraud prevention and credit granting. Businesses throughout the world rely on The Fraud Practice to help them build and manage their fraud and risk prevention strategies. Utilizing best practices and leveraging key partnerships, our team of industry and technical experts offer customers a single source for learning how to design, deploy, review and integrate fraud prevention practices in their business processes and solutions.

David Montague is the founder and President of The Fraud Practice and has spent the last fourteen years working in the eCommerce space, and is well respected for his business knowledge and thought leadership. His background includes an in-depth application of innovative solutions for preventing business to business and business to consumer e-commerce fraud. Prior to founding The Fraud Practice he held positions as the Director of Risk Solutions at CyberSource Inc. and National Principal at IBM Global Services.





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Posted by John B. Frank Thursday, March 19, 2009

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