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Online Payment Options

Credit cards aren't the only way to pay online these days.

This story appears in the October 2006 issue of Entrepreneur. Subscribe »

In 2000, credit cards accounted for more than 90 percent of online payment volume-but by 2009, less than half will come from credit cards, according to a May 2006 study by Boston-based Celent LLC. The gradual shift away from credit card payments is due in large part to the fact that alternative payment options are typically less expensive for merchants to use.

"[It] is unsustainable for credit cards to maintain their dominant presence [in] the model as it is today because it is simply too costly for e-tailers," says Dan Schatt, a senior analyst at Celent. In addition, "There are large numbers of consumers sitting on the sidelines, not willing to make an online transaction because they fear their credit card information-or any information they leave with the merchant-will be misused."

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