Predictions for E-commerce, virtual and real money

I just found this assignment that I did a couple of months ago. We had to write a news feature in a journalistic style for possible inclusion in Internet Retailing‘s newsletter. Time passed and I never knew if any of my classmates got the glory and had the article published. Anyway the good part of having my blog is that I can make my assigments  famous here too. I hope you enjoy it.

E-commerce has become an important topic for digital marketers and primarily, retailers.  It has emerged as the most promising industry at global levels, heading towards $1 Trillion; the U.S. and Europe remain as the main contributors into global Ecommerce sales figure. However, latest trends indicate that the Asia Pacific market is holding the key of future business.

You can’t help but wonder what 2011 will usher in for Ecommerce, what will be the next big thing, the emergence of a new method of paying online? What do people derive the most enjoyment from doing: shopping online for real goods, or buying virtual goods for them to utilise in games?

To find the answers, it is important to know how online payments have evolved. Certainly, since shopping online became a reality, credit cards were the first viable payment option available when merchants needed secure, easy and quick ways that fit within an existing infrastructure.

Now, retailers have opted to work with payment-processing companies specialising in Internet payments – in this way, all transactions are carried out securely and monitored. WorldPay, PayPal and Google Checkout became leaders on this realm, and are highly recommended for their functionality.

WorldPay provides pre-authorisation accounts, allowing the client to confirm if the order and customer are real before logging in to complete transactions.

Google Checkout broadened the spectrum, offering over 140 countries a faster checkout; tracking user’s information and helping merchants to increase sales with their badge displayed on Product Search listings.  It was free for merchants until February 1, 2008. Between that date and May 5, 2009 Google charged merchants (1.4% + £0.20 for UK transactions).

PayPal revolutionized the market of payments in 2009 by allowing developers to incorporate the system into their applications easily. This year, PayPal expects to burst through the $100 billion of transactions, highlighting that 2% of those ($2 billion) will be via mobile.

Marketers tent to prefer the latter, mobile-Commerce in their predictions. Truly mobile has become the big media with 6.8 million UK mobile phone owners ready to use handsets for direct payment and brand interaction. Recently, we have seen attempts by the traditional phone companies to control card payments by enabling the chip in the phone to be a mobile wallet.

Moreover, major players keep bringing innovations to the transaction world, Apple, Google and Facebook threw their respective hats into the payments ring in 2010. Games are driving the emergence of micro-payments and micro-credits where people exchange real money for virtual cash; Zynga is a gaming firm on Facebook that delivers entertainment such as Farmville and Cityville, which takes advantage of this.

I believe that rather than trying to predict the future of ecommerce transactions, retailers should look at the current market first, step back and examine the changing trends in shopping habits, what does the customer lack in the process that retailers can provide? It’s not just about supplying products, it is about enhancing the overall experience.

Commerce has existed for centuries and the general principle is still the same now as it was then – exchanging goods and services. Historically these transactions would have been taking place on street corners or in markets, nowadays they occur on mobile devices. Initially payment was in the form of bartering, then coins, cheques, credit cards and now e-wallets – over time what really matters is the Value.

So here is my list of 10 valuable things that online merchants should focus on in order to keep up with the trends:

  1. Transactions can happen anywhere and anytime – we live in a world of global real-time connectivity.
  2. Apps are revolutionising the way that we make payments – they are a valuable source of revenue for retailers.
  3. Every business that is digitally enabled needs to capture as much information about its customers as possible in order to cater to their needs as thoroughly as they can.
  4. User verification will continue to be the issue of the day.
  5. The payment gateway is key. It is incredible how the most important part of the transaction is the least liked.
  6. Ecommerce must continue to develop new ways to fight fraud, as the fraudsters will continue to be innovative.
  7. Companies that are moving to m-commerce have to develop a unique combination of capabilities and transaction services.
  8. New payment platforms have to focus on making transactions faster and with a more intimate and pleasing on-site experience.
  9. Business like Paypal and Facebook has disrupted the merchants’ market. Many major social networking providers will follow in Facebook’s footsteps by introducing their own forms of currency or branded checkout systems.
  10. The best way to progress is not to rush people towards the future, but to lead them to it at a pace that they are comfortable with.

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