Online Transaction Sales Continue To Grow Despite Sluggish Global Economy



Javelin Study Reveals That Percentage Of Retail Sales Transacted Online Also Continues To Rise



San Francisco, CA, February 17, 2009 – Despite the sluggishness of the global economy during the past two years, U.S. online transactions grew by 11 percent in 2009. At the same time, the share of total retail sales represented by online transactions continued to rise, reaching 5.5 percent in 2009. Javelin’s latest report pinpoints the opportunities and threats.



These were two of the key findings in the Online Retail Payments Forecast 2010 – 2014 report issued today by Javelin Strategy & Research. The report evaluates actual and forecasted changes in the online payment market as well as the payment mix from 2008 to 2014. The report also identifies the drivers of market change and contains forecasts for total online payment volumes and market share. Other aspects covered by the report include a breakdown of the payment volume and market share for credit cards (network and private label), debit cards, alternative payments, and prepaid/gift cards.



"As Americans purchase more online, payment habits are changing," said James Van Dyke, President and Founder. "While credit cards remain the payment method of choice, many new payment alternatives - and even more traditional media such as debit, prepaid, and gift cards - are moving into the mainstream, demanding changes by consumers, merchants and banks."



Key Report Findings

• Mirroring trends in the economy, total retail purchases declined in 2009, but the dollar value of e-commerce sales climbed 11 percent—from $185 billion to $205 billion—despite the weak economy.


• The use of major credit cards for online purchases continued to decline in 2009, but credit cards remained strongest in the vital categories of purchase volume and per-item transaction value.


• Debit-card use continued its online growth as the faltering economy, rising unemployment, and tight credit market motivated consumers to persist in their shift to pay-now instruments.


• Prepaid cards, gift cards, and alternative payments are projected to have the highest rates of compound annual growth for e-commerce purchases through 2014.


• Security is the main driver for consumers using alternative payment methods, yet many banks and technology providers misunderstand how security features affect consumer behavior and actual safety.

"We expect a loosening of credit over the next five years accompanied by a halt in the declining use of credit cards and then followed by a slow resurgence in 2011 and beyond," said Beth Robertson, Director of Payments Research, and primary author of the report. "The credit market is not likely to recover sufficiently until 2011, which will enable online purchase-volumes using major credit cards to exceed levels achieved in 2008."



About Javelin Strategy & Research



Javelin provides superior direction on key facts and forces that materially determine the success of customer-facing financial services, payments and security initiatives. Our advantages are rigorous process, independent position, and expert people. For more information about this or other Javelin reports, please visit www.javelinstrategy.com/research or contact Elizabeth Travers at (925) 225-9100 ext. 31 or etravers@javelinstrategy.com.

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