20 July 2006

British consumers are expected to spend up to £26 billion on the Internet this year, according to new research.

A study by consultancy Booz Allen Hamilton also estimated that an individual shopper would spend an average of £1,000 online during 2006.

However, changing habits in purchasing methods could result in fewer people buying with credit and debit cards, as e-payment methods such as PayPal are becoming increasingly popular.

Nicolas Reuttner, Booz Allen principal, said: "E-payment service providers will have to get exclusive partnerships and services in place to ensure that online retailers are not able to disintermediate them in the long term, for example by offering their own solutions, or pushing credit cards to lower their charges to meet the new market prices."

The firm predicts that default systems, such as bank transfers and credit cards, will be threatened by emerging e-payment services such as Google Checkout, which is estimated to rival Paypal as a major player.

Paypal launched in 1999 and currently has more than a hundred million customers worldwide.

Booz Allen's study also found that the volume of online card payments in Britain had increased five-fold during the last five years, with 310 million transactions adding up to a total of £22 billion spent last year.

© Adfero Ltd

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