The UK will be the world’s third biggest market for eCommerce in 2021, growing by an average of almost 10 per cent over the next five years according to new data from Worldpay.
In its annual Global Payments Report, Worldpay found that UK eCommerce will be worth £203bn (US$268bn) by 2021, putting the country behind only China and the USA in terms of the value of eCommerce transactions. This represents a sustained CAGR of 9.7 per cent in a market that already enjoys near-universal smartphone and internet penetration.
Worldpay’s research, which examined the online shopping market in 36 countries across five continents, found that more traditional payment methods such as credit and debit cards are set to experience a steady decline over the next five years. By 2021 debit card payments are forecast to fall from 31 per cent of the total eCommerce market to 26 per cent, with credit cards and cash on delivery also in decline.
Conversely, eWallets are set for strong growth and are set to eclipse debit cards and become the most popular payment method for online transactions, taking 34 per cent of the market. This rapid growth will help fuel the mCommerce market, which is projected to rise at an annual average of 21 per cent in the next five years, faster than China, the U.S. and Japan.
Commenting on the research, Dave Glaser, Chief Product Officer, Global eCom at Worldpay said: “The UK is a highly-developed eCommerce market, with a population of over 66m - 95 per cent of whom have access to the Internet. As a result, consumers are comfortable with making a wide variety of purchases online and via multiple devices and payment methods. The predicted rise in both eCommerce and mCommerce is a strong vote of confidence in the security and convenience of the UK’s digital payments infrastructure.
“UK consumers are among the world’s earliest adopters of new technologies, including new payment methods, so retailers need to stay on top of technological and regulatory developments. For example, mobile’s share of eCommerce is set to increase to nearly 50 per cent in the next five years, while smartphones will outpace tablets in the same timeframe. Merchants should therefore invest in developing their own apps to build a seamless shopping and checkout experience for all users, across every device, and support the most popular payment methods.”
Worldpay has compiled the following recommendations for merchants looking to cash in on the continued strong growth of mCommerce and eCommerce in the UK:
1. Be an early adopter. As the world’s third most valuable eCommerce market, the UK is always one of the first markets to introduce new payment technologies, as we saw with the payment services developed by Apple, Samsung and Google - among others. Retailers should therefore move fast to assess and, where suitable, introduce new payment methods within their existing eCommerce and mCommerce platforms.
2. Focus on optimising transaction flow. As early adopters, the UK’s consumers are used to seamless, intuitive online and mobile retailing. Poor user experience, including a convoluted and time-consuming online check out, is a sure way to frustrate consumers in this market.
3. Consider smart routing of 3-D Secure payments. This protocol provides an extra layer of security for online payments, which is critical for maintaining the confidence of UK consumers who are highly security conscious and aware of the risks associated with shopping online. 3-D Secure has the additional benefit for merchants of reducing chargebacks from unauthorized transactions, helping to protect your business’ revenue.
4. Look at CV2 and AVS (address verification service) as an opportunity, not a barrier to overall payment acceptance. Communicating the benefits of these systems, if done correctly, will help to boost consumer trust and lead to stronger relationships.