Most Consumers Use Alternative Payments On Mobile, A Complete Reversal Of Desktop Pattern

When an E-Commerce firm this week analyzed two months of recent online shopping data (for all of April and May), it found an interesting disconnect between shoppers using a mobile device versus those using a desktop device. When using a laptop or desktop, 62 percent of shoppers used a payment card, with the remaining 38 percent going for an alternative payment (PayPal, Amazon Payments, Google Checkout, etc.). But when those same shoppers worked with the same retailers using an iPhone, iPad or Android device, 67 percent of them opted for alternative payments.

This research from vendor ShopVisible—where they examined about 23,000 transactions—is pretty much explained by the need for mobile shoppers to use "the fewest thumb taps that they can," said ShopVisible CEO Sean Cook. That makes sense, but it's not necessarily the case that alternative payments require fewer keystrokes. The various one-click mobile efforts—from Amazon and others—can match, if not better, the fewest keystroke options from PayPal and others.

The data examined looked at 86 retailers, whose annual E-Commerce revenue ranged from about $5 million to $100 million. That certainly raises the question of whether customers might interact differently with those sites than when dealing with major chains making many billions in revenue.

The vendor said that the most popular of the third-party payment methods in their research was PayPal, which represented 16.8 percent of all desktop payments. (ShopVisible didn't break out how the third parties split revenue for mobile.)

Was this solely a reduced keystroke issue or was PayPal a much more famous—and, therefore, comforting—brand than some of the smaller retailers examined? With data breach reports becoming commonplace and mobile devices notorious for having weaker security than their desktop older cousins, could it have been the comfort of a major brand that made shoppers make that choice?

To be clear, Visa, MasterCard and American Express are certainly major brands, but they rarely offer quick and easy payment entry options. And as PCI aficionados will stress, Visa payments do rely on the security methods of the retailer, whereas PayPal can be a more direct mechanism. Hence, the issue of trust of that retailer brand is still a major issue.

That's why it would be so interesting to see this exact study done examining this same question with the top 25 retailers. The split that ShopVisible found may or may not apply to major retail chains.

Retail size aside, the implications of this mid-market survey are clear: Speed of payment entry will dictate payment method chosen, assuming all else is equal. The closer chains can get to one-click speed for all payments, the better.