PayPal is now more popular among Americans for making online payments than debit cards with its perceived strong security helping attract users, according to a survey from Auriemma Consulting Group (ACG).
ACG, which quizzed 428 US cardholders, says that among the 78% of respondents who shop online, credit cards continue to be the dominant method of payment, used by 70%.
However, increasing numbers of consumers are using other methods as well: 39% use PayPal, just edging out debit cards, on 37%, for second place. In fact, the firm claims more than three quarters of respondents actually have a PayPal account, up from 55% just two years ago.
While credit cards are considered the most convenient way to pay for online purchases, PayPal is rated as the most secure.
The average purchase amount for PayPal transactions is virtually unchanged from 2008, at just under $60. However, the number of PayPal transactions reported by consumers in the survey doubled, from 10.8 in 2008 to 21.2 this year, raising the average annual spend by about $635.
The firm is also relying less on business from its parent, online auction house eBay, which now only accounts for around a third of transactions.
"Although services like PayPal can drive credit card volume by allowing customers to fund their accounts with their cards, their increasing power to cannibalise sales poses a challenge to the card industry, especially if these players venture into the brick-and-mortar environment," says ACG.