• August 12, 2010

While credit cards are considered the most convenient way to pay for online purchases, PayPal was rated as the most secure in a recent survey by Cardbeat, a syndicated market research report published by Auriemma Consulting Group (ACG).

PayPal has become increasingly mainstream. More than three-quarters of respondents to the survey said they have a PayPal account, a 40% increase since the 2008 Cardbeat study, when 55% of respondents had one.

Among the 78% of respondents who shop online, credit cards continue to be the dominant method of payment for online purchases, used by 70%. However, increasing numbers of consumers are using other payment methods as well: 39% use PayPal, just edging out debit cards, used by 37%, for second place. 

The average purchase amount for PayPal transactions was virtually unchanged from 2008, at just under $60.  However, the number of PayPal transactions reported by consumers in the survey doubled, from 10.8 in 2008 to 21.2 in June 2010, raising the average annual spend by about $635. 

Although services like PayPal can drive credit card volume by allowing customers to fund their accounts with their cards, their increasing power to cannibalize sales poses a challenge to the card industry, especially if these players venture into the brick-and-mortar environment, as some industry experts have predicted, according to the study, which includes data from a survey of 428 cardholders conducted in June 2010.--Tanya Irwin