Alternative Payments Becoming Not So Alternative

Written by Evan Schuman
December 12th, 2007

Although the top alternative payment options today can hardly be called mainstream, the adoption rate of the top three has continued to soar, with almost one out of every three major e-tailers accepting at least one, according to a new study from Brulant.

That 30 percent of major e-tailers accepting alternative payment in November 2007 is up from 24 percent in February 2007 and 9 percent in October 2006.

The Brulant study looked at what payment methods were accepted by the 100 largest e-tailers in the U.S. All three of the top alternative payment players—Bill Me Later, PayPal and Google Checkout—could find something to brag about in the results.

The actual number of sites gave Bill Me Later the winning hand, accounting for some 21 percent of the surveyed sites, the top result. Although PayPal came in second—at 19 percent—it scored with the largest increase since the prior report. PayPal’s adoption rate increased 217 percent since the February 2007 survey. Even though GoogleCheckout was the smallest in the new survey (10 percent), it can brag about having doubled its adoption rate since the last survey.

Altogether, it shows a very robust alternative payment space. That point was driven home Tuesday when announced that it would accept its first alternative payment and that it would be Bill Me Later.

The Amazon statement gave Bill Me Later a morale boost, but its statement was vague on details. Although saying that it would indeed offer Bill Me Later as an option to its customers, neither Amazon nor Bill Me Later would say when, other than that it wouldn’t be this year.

Amazon’s statement also said that it was making an unspecified equity investment in Bill Me Later Inc.. Mark Lavelle, the Bill Me Later VP of business development, clarified that it would be a minority investment, but wouldn’t be any more specific.

To varying degrees, this gives the three most powerful online companies a stake in each of the three top alternative payment players, with Google pushing its own Google Checkout, EBay banking on its PayPal service and Amazon owning a slice of Bill Me Later.

The Brulant study also noted a new payment development, with an increase in retailers accepting all three forms of alternative payment. "One of the most surprising findings in our most recent evaluation is the increase in retailers offering all three alternative payment methods," says Brulant principal Adam Cohen. "As recently as February of this year, none of the retailers we surveyed offered all three methods. Today we find 5 percent adoption of all three."

The retailers in the study accepting all three were NHL, Petsmart, Rite-Aid, Sharper Image and Toys R Us.


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