Are Credit Cards About to Be Dethroned?By Evan Schuman | Posted 04-24-2007
The retail industry is traditionally slow to adopt new technology and new payment methods, but once some retail leaders get comfortable with the idea, it can snowball into a very rapid trend.
See also: Big Change for Small Change
It's happened with self-checkout, buy online and pickup-in-store and—most recently—with contactless payment. Are alternatives to credit cards next? Although Visa, MasterCard and American Express have substantial staying power, several recent events suggest a challenge to the three Princes of Payment unlike anything retail's ever seen.
Earlier this month, a company released the results of a practical survey it conducted, where its analysts visited the top 100 largest E-Commerce sites to see what payments they accepted. Alternative payments for that survey were Google Checkout, EBay's PayPal and Bill Me Later.
Between a visit in October 2006 and a follow-up in February 2007, acceptance of alternative payments soared 267 percent. Note: This wasn't an opinion survey of either consumers or retailers. This was an elegantly simple tactic of looking at their sites. For the credit card companies, that's strike one.
Then came word last week that Wal-Mart is bucking the industry trend by supporting e-Check procedures. That will allow the chain to electronically accept checks, a move that one Wal-Mart exec estimated would save a billion dollars a year. Even though most retailers had declined to support e-checks, the backing of the $345 billion chain is going to cause many retailers to reconsider. That's strike two.
This week, word came down that two major national retail chains will start accepting—on a trial basis—Bill Me Later payments in their stores. If successful, this could signal the quick migration of alternative payments from merely online to brick-and-mortar. That's strike three.
Mark Lavelle, the business development VP for I4 Commerce (which owns Bill Me Later), says his internal numbers have shown the trend. Bill Me Later today touts about 450 retailers, compared with 250 a year ago and between 60 and 80 retailers a year before that.
They also charge retailers transaction fees, but they're lower than credit card fees. On a $100 purchase, Visa and MasterCard typically charge about $2 whereas Bill Me Later charges $1.50, Lavelle said.
Read the full story on eWEEK.com: Are Credit Cards About to Be Dethroned?