October 14, 2005

Forrester on PayPal Usage

I’ve been trying out a few shopping carts lately in advance of revamping the DianeV e-book section which currently uses the PayPal shopping cart. The idea was to convert over to our merchant account, and to get rid of the incessant deluge of spam that utilizing PayPal’s shopping cart brings (because it requires an email address to be embedded into the HTML code).

Now [via MarketingWonk], Forrester Research Inc. has issued some surprising data. The following was published on the Internet Retailer site:

Forrester tapped into its own data from the first quarter to show that while in the previous three months, 79% of consumers reported paying for online purchases with credit cards, the percentage of those who reported using PayPal was up to 43%. 39% of consumers surveyed said they used debit cards to pay for online purchases, while 10% used Bill Me Later. 8% reported using gift cards, while 7% sent a check in the mail, according to Forrester’s data.

Frankly, this shocked me. First, I’m hard pressed to imagine myself using a debit card for online purchases since debit cards tie right into your bank account. But more surprising was the PayPal data: forty-three percent?

The smart advice has long held that using the PayPal shopping cart made a website look less professional. Forty-three percent?

Without having read Forrester’s research, I can’t know who all these shoppers were. However, one can make seeming sense of the data: putting the findings together, it sounds as if people are moving away from using credit cards to straight cash, or the electronic equivalent of cash:

  • 43% — PayPal: one can add money from a bank account to one’s PayPal account.
  • 39% — Debit cards: from a bank account.
  • 7% — Checks: from a bank account.

That adds up to a whopping 89%. I’m not sure who these shoppers might be, or what they were buying. Shopping at eBay, maybe? In which case, the findings may not be so earth-shattering.

Alright. Back to my post as doorman and waitress to a cat. :)

5 Comments to "Forrester on PayPal Usage"

  1. Brad says:

    I actually feel safer paying by Paypal on most smaller sites, because only paypal has my financial information. With Paypal I’m not leaving my CC numbers on servers all over the Internet.

    Just as an example – if I’m submitting a website to many dozens of newish general web directories, I’m going to feel much safer paying by Paypal and _not_ giving these people, my CC info directly nor will it be stored on their servers waiting for some hacker to break in.

    The point is I think a lot more people are figuring this out too and selecting the PP option when given the choice.

  2. DianeV says:

    You have a point there, Brad. There are things I don’t care for about PayPal, but you’ve named the one overriding benefit.

    I was able to find the Forrester survey (the survey demographic seems to have been among “young people” in the US and Canada).

    In any case, this is excellent data. Our shopping cart revamp will include PayPal, in that case.

    I have to say that my other concern about using our merchant account is consumer fraud. …

  3. Kim Krause Berg says:

    Very interesting Diane. Your research helped answer some of my own questions and also explains the increase in PayPal usage I’ve seen as well. Great post! Thank you :)

  4. DianeV says:

    Thanks, Kim.

    As it turns out, Bill Me Later allows people to purchase online without using their credit cards. It looks like — at least among “young people” — this is a trend. And something to take into account.

  5. Marc Grobman says:

    Hi DianeV,

    Great to be reviewing your fine words of wisdom again.

    I agree that those stats MUST include Ebay purchases. A few contradictory points:

    PayPal not only looks a little unprofessional, many people who just want to use a credit card remember PayPay as a hassel that requires signing up. I’ve talked to a few people lately who still think of PayPal that way.

    On the other hand… I don’t think it is now considered so unprofessional to use a 3rd party website for processing. Many high profile sites do it now and, for unknowns, it may even lend a little credibility. Yahoo stores are similar and they get the job done.

    Thanks for the great resource!

    Marc

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