global payment gateways of the future - nielsen · global payment gateways of the future c 2014 t n...

1GLOBAL PAYMENT GATEWAYS OF THE FUTURE Copyright © 2014 The Nielsen Company

G L O B A L PAYM E N T G AT E WAY S O F T H E F U T U R E FEBRUARY 2014

2 GLOBAL PAYMENT GATEWAYS OF THE FUTURE

T H E M O V E M E N T TO WA R D A C A S H L E S S S O C I E T Y Competition for consumers’ wallets is gathering pace as a result of the

transformation of the payments ecosystem that is being driven by the

introduction and adoption of contactless payment technology, multi-

currency cards, changes in regulations, and the advancement of Internet

retailing and mobile banking. Each of these factors is accelerating the

movement away from cash toward electronic payments. Technological

advancement has also introduced new options and new competition.

Credit cards are now joined by other convenient payment methods that

have entered the ecosystem. Stored value cards allow for contactless

payment at the point of sale, providing swipe-and-go convenience for

shoppers, and mobile wallets can debit a customer account tied to either

a bank account or a payment card.

Consumer needs are also evolving. There is a growing demand for

greater choice and more personalization of services. Consumers

expect rewards for their card loyalty through either promotions offering

discounted shopping and advance sale privileges or the accumulation

of points redeemable for travel or other services. Increased overseas

spending trends on e-commerce, education and travel have also created

a preference for consumers to pay in their home currency.

To better understand how payment preferences are evolving around

the world, Nielsen conducted a global survey, which polled more than

30,000 Internet respondents in 60 countries. The findings reveal that

one out of every two people around the world use plastic rather than

paper as their preferred payment method for daily spending. As the card

market becomes more competitive, strategic marketers that know how

to drive usage will be rewarded with loyalty.

ABOUT THE GLOBAL SURVEY METHODOLOGY

The findings in this survey are

based on respondents with online

access across 60 countries. While

an online survey methodology

allows for tremendous scale

and global reach, it provides a

perspective only on the habits

of existing Internet users, not

total populations. In developing

markets where online penetration

has not reached majority

potential, audiences may be

younger and more affluent than

the general population of that

country. Additionally, survey

responses are based on claimed

behavior, rather than actual

metered data.


A P R E F E R E N C E F O R P L A S T I C O V E R PA P E RWhile consumers set up automatic payments for large ticket items such

as automobile, insurance and mortgage payments, global consensus

shows that consumers prefer to use payment cards over cash for general

shopping, dining, travel and entertainment purchases. The growing

penetration of smartphone adoption and the development of mobile

(e-wallet) applications will likely further advance the cashless trend.

More than half (54%) of global respondents in Nielsen’s survey

prefer using cards to any other payment method for daily spending.

The most preferred payment vehicle is credit cards, with 29 percent

of global respondents choosing credit cards; and an additional 23

percent choosing debit cards and 2 percent selecting prepaid cards.

A considerable opportunity for growth in the cards market exists, as

39 percent of respondents still use cash as their preferred means of

payment.

The rising global population, coupled with an increase in disposable

incomes and urbanization, has increased dependence on digital devices

for information in emerging economies. This trend is clearly evident

in Asia-Pacific, which shows a higher preference for using credit cards

compared with the global average. China, Hong Kong and Singapore

respondents all show a stronger preference for using plastic for payment

rather than cash. This is further supported by the rapid penetration of

smartphone and digital devices and the growing appetite for ecommerce

in these markets.

In highly competitive markets, qualified cardholders can choose to

subscribe to multiple cards from numerous issuing banks and non-bank

financial institutions, and between credit and debit card payments and

non-card payments, such as cash at merchant stores. Given the increase

in the number of payment options in consumers’ wallets, banks need

to fine-tune payment card marketing activities and product strategies to

not only accelerate transactions per card, but to also maintain customer

loyalty.


CARDS (CREDIT, DEBIT, PREPAID) CASH

STRONG PREFERENCE FOR CARDS OVER CASH IN ASIAN MARKETS

When it comes to your daily spending routine what is your MOST preferred payment vehicle?

GLOBAL AVERAGE

54 39

CHINA

71 22

HONGKONG SINGAPORE

37 4060 55

Source: Nielsen Global Survey of Saving and Investment Attitudes, Q3 2013


W H I C H C A R D TO C H O O S E ?When it comes to choosing a credit card, there’s no shortage of variety—

from low-rate cards to standard cards without an annual fee to premium

cards that offer rewards and loyalty features. But today’s consumers

are not only drawn to cards for their rewards, security and protection,

they are also influenced by merchant promotions and special offers

at the point of sale. Advanced technologies at the point of sale allow

merchants to offer promotions and support spending across multiple

cards, making purchase transactions seamless and easy for consumers.

To help drive purchase volume, card issuers have designed cards and

related promotions for specific purchases. Today, banks issue cards that

are used exclusively for children attending college/higher education

or cards designed to incent travel loyalty by offering points for airline

tickets, hotel rooms and car rental purchases. Consumers have defined

specific uses for the cards in their wallets, too. For example, given

the limited transaction detail on cardholder statements from online

merchants using PayPal, AliPay, BPay or other alternate payment

providers, consumers may have one card that is used exclusively for

online purchases.

Nielsen information shows that 39 percent of respondents around the

world use one payment card on a regular basis, 37 percent use two,

14 percent use three and 10 percent use more than three cards. When

asked their preference for card brand, 43 percent of global respondents

selected Visa, followed by 20 percent choosing MasterCard. In China,

a majority 67 percent of respondents said they use Union Pay as their

primary payment card.


*In China, 67% said they use Union Pay.

43%

20%

17%*

2%

Visa

MasterCard

Union Pay

American Express

GLOBAL AVERAGE

WHAT IS THE BRAND OF YOUR PRIMARY PAYMENT CARD?


L OYA LT Y H A S B E N E F I T S To maintain customer loyalty and market leadership in the evolving

payments market, issuers need to create marketing strategies that

not only differentiate products from other issuers, but they also need

to manage the influence and advancement of non-bank and mobile

payment providers.

And the stakes are high. Global credit, debit and prepaid card purchase

transactions are expected to reach 289 billion by 2018, representing

a 74 percent increase from purchase transaction volumes from

2012 (according to a January 2014 Nilson Report). Additionally, the

transaction volume in Asia-Pacific is expected to reach 71 billion by 2018,

representing nearly 25 percent of the total marketplace. Mobile purchase

transactions also continue to grow significantly, with the global market

more than tripling in the last two years. The growth of e-commerce

transactions in Asia is expected to top $400 trillion in 2014, capturing

more than one-third of global B2C e-commerce sales, according to

global estimates by eMarketer.

As consumers have become more discriminate, they are ready to switch

providers if a better card reward program arrives. Knowing when, how

and where to reach consumers is critical to further deepen cardholder

loyalty. Transaction data offers banks, merchants, and card providers

rich information about customer spending patterns and preferences,

which can be used to better understand the correlation of issuance and

activation to merchant acceptance. Providers who offer reward programs

and promotions designed specifically to meet the future purchase needs

of cardholders stand a greater chance of driving increased transaction

volume and loyalty from customers, resulting in increased in sales

volumes for the merchants.


T H E R I S E O F M O B I L E M O N E Y As the first thing most of us pick up in the morning and the last thing

we set down before sleeping, digital devices continue to play a central

role in our lives. And with banks now working with telecom operators

and handset manufacturers to securely store payment card details into

smartphones, the use of mobile wallets is picking up pace.

When it comes to cyber-safety concerns, more than half of global

respondents (54%) are not worried about shopping online and using

their payment card on either a smartphone or tablet device as long as

their personal information is protected. One in four global respondents

say they might use their credit or debit cards for online payment, and

one-fourth (26%) would not use their cards on a either smartphone

or tablet. Respondents in Asia-Pacific (65%) and Latin America (54%)

report the highest levels confidence to use their payment cards on their

smartphone or tablet device.

WOULD YOU SHOP ONLINE WITH A SMARTPHONE OR TABLET IF YOUR PAYMENT CARD WAS STORED SAFELY?

65%

54%

45%

41%

38%

ASIA-PACIFIC

LATIN AMERICA

MIDDLE EAST/AFRICA

NORTH AMERICA

EUROPE

YES



Nineteen percent of global respondents use an e-wallet as their

preferred payment vehicle for daily spending. Usage is slightly higher

in Asia-Pacific, where 23 percent of respondents use an e-wallet for

purchases; with respondents in New Zealand and China reporting levels

above the regional average, at 44 percent and 30 percent, respectively.


E-WALLETS USAGE IS STRONG IN ASIA-PACIFIC

GLO

BAL

AVER

AGE

NEW

ZEA

LAN

D

CH

INA

VIET

NAM

AUST

RALI

A

HO

NG

KO

NG

SIN

GAP

ORE

ASIA

-PAC

IFIC

19%

23%

44%

30%

25%22% 21%

18%

Percent using an e-wallet as the preferred payment vehicle for daily spending


O N L I N E S H O P P I N G B O O N The speed of the Internet, accelerated adoption of mobile applications,

and enhanced payment security have enabled consumers to shop from

the comforts of their home, browsing across multiple sites to check

availability and shop for the best price 24 hours a day, seven days a

week. Many vacations are no longer planned with the help and advice of

a local travel agent, but rather are decided by researching travel websites

for top rated hotels and tourist attractions, upcoming events and local

activities. Today’s travelers have access to up-to-the-minute details

about package promotions and special value airfares. Many airlines

offer discounted fares if tickets are purchased online, with additional

privileges for using a partner card for payment. In the digital world, the

consumer truly shops in a global market place.

Asian respondents are more interested in shopping online at merchants

that do not have a local presence. Only 16 percent of Asia-Pacific

respondents in Nielsen’s 2011 online survey have interest in a site that

also offers local brick and mortar in-store shopping. Forty percent of

these respondents prefer shopping at sites that are only available online.

While online shopping provides greater convenience and variety, it also

offers the benefit of online product reviews. Nielsen information shows

that 63 percent of online purchasers in Asia-Pacific use social media

sites to help drive purchase decisions.


GLOBAL AVERAGE ASIA-PACIFIC

Computer Software 29% 35%

Computer Hardware 25% 33%

Hardcopy Books / Newspapers /

Magazines33% 42%

Digital Books / Newspapers / Magazines 20% 26%

Travel Reservations 30% 34%

Entertainment Tickets 30% 34%

Clothes / Shoes / Jewelry 37% 46%

Mobile Phone 26% 33%

Digital Camera 21% 29%

Skin Care / Cosmetics 25% 34%

Health Products / Excercise Equipment 17% 22%

Food & Beverage 26% 37%

Household Appliance 22% 26%

Furniture / Household Decoration 15% 18%

Household Cleaning Supplies 16% 22%

ONLINE SHOPPING INTENTIONS IN ASIA-PACIFIC IS STRONGER THAN THE GLOBAL AVERAGE What categories of products do you plan to purchase on any connected device in the next 3 to 6 months?

Source: Nielsen Global Survey of Digital Shopping, Q1 2012


M O R E C H O I C E R E Q U I R E S N E W T H I N K I N G As payment innovations, such as e-wallets, multi-currency cards and

alternate online payment processors become more widely accepted, the

ease of making purchases will likely drive consumers to spend more

frequently.

The increased usage of mobile phones to access the Internet will further

propel online shopping for goods and services. And with the continued

shift of wealth from the west to the east, a particular focus is on China—

one of the fastest-growing consumer markets in the world.

To keep pace with changing spending behaviors, strategic card issuers

rely on enhanced insights to understand cardholder behaviors and to

develop products and promotions that are more closely aligned with

spending patterns. Banks that offer cardholder promotions and rewards

at the right time, in the right place and with the right message will be

rewarded with customer loyalty.


Source: Internet World Stats, June 30, 2012

MARKET INTERNET PENETRATION

AUSTRALIA 89%

CHINA 40%

HONG KONG 75%

INDIA 11%

INDONESIA 22%

JAPAN 80%

MALAYSIA 61%

NEW ZEALAND 88%

PHILIPPINES 32%

SINGAPORE 75%

SOUTH KOREA 83%

TAIWAN 75%

THAILAND 30%

VIETNAM 34%

MARKET INTERNET PENETRATION MARKET INTERNET

PENETRATION


AUSTRIA 80%

BELGIUM 81%

BULGARIA 51%

CROATIA 71%

CZECH REPUBLIC

73%

DENMARK 90%

ESTONIA 78%

FINLAND 89%

FRANCE 80%

GERMANY 83%

GREECE 53%


EGYPT 36%

PAKISTAN 15%

SAUDI ARABIA 49%

SOUTH AFRICA 17%

UNITED ARAB EMIRATES

71%


CANADA 83%

UNITED STATES 78%

COUNTRIES INCLUDED IN THIS STUDY

ASIA-PACIFIC

EUROPE

MIDDLE EAST / AFRICA

NORTH AMERICA

LATIN AMERICAEUROPE

HUNGARY 65%

IRELAND 77%

ISRAEL 70%

ITALY 58%

LATVIA 72%

LITHUANIA 65%

NETHERLANDS 93%

NORWAY 97%

POLAND 65%

PORTUGAL 55%

ROMANIA 44%

RUSSIA 48%

SERBIA 56%

SLOVAKIA 79%

SLOVENIA 72%

SPAIN 67%

SWEDEN 93%

SWITZERLAND 82%

TURKEY 46%

UNITED KINGDOM

84%

UKRAINE 34%

ARGENTINA 66%

BRAZIL 46%

CHILE 59%

COLOMBIA 60%

MEXICO 37%

PERU 37%

VENEZUELA 41%


ABOUT NIELSEN Nielsen Holdings N.V. (NYSE: NLSN) is a global information and

measurement company with leading market positions in marketing

and consumer information, television and other media measurement,

online intelligence and mobile measurement. Nielsen has a presence in

approximately 100 countries, with headquarters in New York, USA and

Diemen, the Netherlands.

For more information, visit www.nielsen.com

Copyright © 2014 The Nielsen Company. All rights reserved. Nielsen and

the Nielsen logo are trademarks or registered trademarks of CZT/ACN

Trademarks, L.L.C. Other product and service names are trademarks or

registered trademarks of their respective companies. 14/7469

ABOUT THE NIELSEN GLOBAL SURVEY The Nielsen Global Survey of Saving and Investment Strategies was

conducted between August 14 and September 6, 2013, and polled more

than 30,000 consumers in 60 countries throughout Asia-Pacific, Europe,

Latin America, the Middle East, Africa and North America. The online

shopping findings on pages 9 and 10 in this report are from the Q3

2011 and Q1 2012 Global Surveys of Online Shopping Intentions. The

sample has quotas based on age and sex for each country based on

their Internet users, and is weighted to be representative of Internet

consumers and has a maximum margin of error of ±0.6%. This Nielsen

survey is based on the behavior of respondents with online access only.

Internet penetration rates vary by country. Nielsen uses a minimum

reporting standard of 60 percent Internet penetration or 10M online

population for survey inclusion. The Nielsen Global Survey, which

includes the Global Consumer Confidence Survey, was established in

2005.

global payment gateways of the future - nielsen · global payment gateways of the future c 2014 t n...

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