How Alternative Payment Methods Are Transforming the Payments Industry
The Pay Later solution has gained a lot of popularity by eliminating the need for a credit card. A Divido study explains the need for more convenient option of paying, as, for instance, 17% of UK-based consumers stress on the availability of different finance options as the most important factor, with 36% admitting they would shop again at a retailer offering it. At the same time, retailers are seeing benefits such as increased customer loyalty and repeat purchases, increased basket conversions, and sales uplifts of up to 30% by implementing customer finance.
Internet information exchange on behalf of the invasion led to unsafe or high risk of fraud. For any expert in internet security will tell, e-commerce is actually much more secure than real world commerce. For example like when you leaved your credit card receipt in the shop, or accidentally give your credit card number to someone else, you are actually accepting the risk that the order which not order from you will appear on the next month’s credit card bill. However, when you enter a credit card number of e-commerce site, you are sent through a secure connection to a server access only to authorized personnel and protected against even the most determined intruders. Although some of the people believe that transactions over the internet are in fact safer than offline transactions, there are still a number of people believe that offline transactions are always better than online payment. For example like protecting the credit card detail, company need to prevent the card info from customer or the privacy of the customer found by a third party. Typically, this involves the company network security and how the company provide a strong and secure system on the internet.
The existing literature on network effects and two-sided markets could be useful in addressing this challenge (for example, Farrell and Saloner 1985, Katz and Shapiro 1985, Schiff 2003). Like the empirical literature, however, the theoretical literature that incorporates frictions and generates a demand for payment instruments also misses answering the question of how or why consumers choose which payment instrument to use at the point of sale. Some papers take as given the set of payment instruments and assume the set is small, limited to one or two instruments (e.g., Schreft (1992(a), 1992(b)).
These payments settle faster and carry a lower risk of fraud and chargebacks (they use Strong Customer Authentication by default).
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