Ecommerce Industry Market Overview

Content
Ecommerce
Industry Outline
Emerging Ecommerce
Industry Trends
Ecommerce Sales
Projections Worldwide
Ecommerce Key
Growth Drivers
Ecommerce
Environment
Ecommerce
Business Model
Ecommerce
Challenges
Ecommerce Marketing
Solutions
Ecommerce
Features
Ecommerce
Participants
2

Ecommerce Industry
European Union
Ecommerce in Europe has once again shown
some double-digit growth. The total ecommerce
turnover in Europe increased by 11 percent last
year, making it worth 534 billion euros.
China
Total Chinese eCommerce
revenue across all product
categories is 584 billion USD, and
is expected to grow to 917.7
billion USD by 2022.
Japan
89.55 billion US dollars and are
projected to grow to 122.46 billion
US dollars in 2018.
Asian
Total ecommerce revenue across
all product categories is 617 billion
USD, expected to surpass 1 trillion
USD by 2021. .
United States
In 2018, online sales of physical
goods amounted to 504.6 billion US
dollars and are projected to surpass
735 billion US dollars in 2023.
$504.6
billion
€534
billions
$584
billion
$617
billion
$89.55
billion
3

4500$ bln
Cross Border RetailE
CommerceSales
Worldwide(2021F)
4$ bln
CapitalizationofRetail.
Global (2021F)
650$ bln
RetailE-commerceSales
Worldwide(2021F)
Ecommerce Sales Projections
Worldwide
4

Emerging Ecommerce Industry Trends
Lower Operational
Costs
• Decreased real estate costs; investment funds as far
as rentals, energy costs, worker costs and so forth.
• Reduced stock expenses with shift from inventory-
led models is to commercial center models.
Increasing Internet
Penetration
• Web entrance, rising broadband speedsfacilitating
development.
• Mobile data clients in country is required to build four
times to achieve 1200 million by 2018.
Wider
Customer Reach
• Web interface making it easier to connect
with non metro areas.
• Driving e commerce players asserting 50%
to 60% of incomes from T2/T3 areas.
Rise in Demand for
Global Product
• Clients in developing markets hoping to
purchase established international brands.
• Increase in worldwide transportation adding
to cross border e-commerce growth.
5

Ecommerce
Environment
Competitors
Partners
Customers/
Clients
Communities
Legal / Regulation
Technology
Economic
Force
Work Force
E-Business
6

Ecommerce Business
Model
Ecommerce
Model
Your
Website
Customer
Buys
YouGet
Paid
You Supplier
Ships to the
Customers
You Pay the
Supplier
7

Ecommerce Business Model
9
Clients
Clients Place Orders
Vendors
Shipping
Magento Marketplace
Vendors Receive Orders

Ecommerce
Participants
9
B2B B2C B2G
Businessto business
• PayPal (and B2C, “ B2B2C”)
• Optize (and B2C)
• Alibabagroup
Businessto consumer
• Amazon
• Freshdirect
• Zynga (and C2C)
Businessto government
“E - Procurement”
C2B C2C C2G
Consumersto business
• Zonzoo
• Fotolia
• Google Adsense
Consumersto customer
• Prosper (“P2P”)
• EBay
• Facebook
Citizen to government
Agencia Tributaries(Tax AgencyOnline)
G2B G2C G2G
Governmentto business“E-
Government”
• AEPM
• Certificado digital
Governmentto citizen “E-
Government”
• EDNI
• Usa.gov(also G2B)
Governmentto government
• Government Gateway
• Schengen Information System

Ecommerce
Features
10
Ubiquity
Global Reach
Universal, Standards
Social, TechnologyPersonalization, Customization
Information, Destiny
Interactivity
Richness
E-COMMERCE

Ecommerce Marketing
Solutions
11
SocialMediaMarketing
Web Design& Development
Paid Search Optimization
Affiliate Marketing
Mobile CommerceGoogle Shopping& Amazon DataFeeds
Conversion Rate Optimization
EmailMarketing
SEO & ContentMarketing
Ecommerce
Marketing
Solutions

Ecommerce
Challenges
12
Poor Knowledge
and Awareness
Tax
Security
Logistics and
Shipment Services
Online
Security
Online
Transaction
Touch and
Feel” Factors
Fear
Factor
Cash on
Delivery
E-Commerce
Challenges

Internet Penetration
INTERNET PENETRATION: TOP 10 COUNTRIES* INTERNET PENETRATION: LOWEST 5 COUNTRIES*
Countries Share of popu
lation using i
nternet
Online populati
on
United Kingd
om
97.52% 63mn
South Korea 95.21% 48.3mn
Japan 92.69% 116.83mn
Australia 92.44% 22.8mn
Germany 91.76% 74mn
Canada 91.41% 33.5mn
France 86.55% 56mn
Spain 82.32% 38mn
Russia 79.44% 114mn
Israel 79.17% 6.6mn
Countries
Share of popul
ationusing inte
rnet
Onlinepopulatio
n
Brazil 61.02% 129mn
China 56.26% 781mn
SouthAfrica 56.07% 31mn
India 33.02% 443mn
Indonesia 28.69% 75.6mn

Europe has the highest E2GDP of
all the regions
Europe
4.91%
Source: Ecommerce Foundation, 2017.
North America
2.21%
South America
1.03%
Asia Pacific
4.87%
Middle East &
Africa
0.74%
EDGDP: REGIONAL1
Ecommerce share of GDP, USD, regionally, 2017(f)
Overall
2.92%

The U.K. has the
highest E2GDP
7.9%
5.8%
3.9%
2.9% 2.7% 2.5% 2.3%
1.9% 1.6% 1.6% 1.6% 1.5% 1.4% 1.3% 1.3% 1.3%
0.8% 0.8% 0.7% 0.7%
0.3%
EDGDP:BYCOUNTRY1
Ecommerce share of GDP, $USD, by country, 2017(f)

Less than 6
months
6 months to 1
year
1 to 2 years
2 to 3 years
3Years or
more
30% 27% 30% 26%
16% 13%
13%
18%
14%
16% 19%
20%
14%
14%
12%
12%
31%28% 26%
20%
Europe North America South America Asia Pacific
Over 50% of consumers purchased via mobile
device 1+ years ago
CONSUMER BEHAVIOR: MOBILE PURCHASE1
Consumers’ first purchase via smartphone/tablet; by region, 2016
Country
1 year agoor
longer
Europe 57%
North America 57%
South America 52%
Asia Pacific 61%
Country Average 57%
CONSUMER BEHAVIOR: MOBILE PURCHASE1
Consumers’ first purchase via smartphone/tablet, by region, 2016

Daily
122times a week
223time a month
Once a month
5211times a year
224times a year
Once a year or less
7% 7% 4%
10%
11%
15% 14%
21%
18%
25% 26%
25%24%
20% 20%
10% 16%
11% 11% 12%
10%
10% 11%
22%
8%
11% 11% 11%
Total% Weekly or More
31%
22% 21%
15%
Europe North
America
South
America
Asia Pacific
Nearly 25% of consumers purchase weekly
via mobile device
CONSUMER BEHAVIOR: MOBILE PURCHASE FREQUENCY1
Frequency of mobile purchases; by region, 2016

15% 13% 17% 17%
41% 43%
47% 47%
40% 39%
34% 30%
Extremely Satisfied
Somewhat Satisfied
Neither satisfied nor
unsatisfied
Majority of global consumers are satisfied with
mobile purchases
CONSUMER OPINION: MOBILE PURCHASE SATISFACTION1
Consumer satisfaction levels with mobile purchases;by region, 2016

89% 87% 85% 85% 84% 84% 81% 80% 80% 79% 79% 79% 78% 78% 77% 75% 75% 73% 73%
UK and Canadian consumers are most satisfied
with mobile purchase
CONSUMER OPINION: MOBILE PURCHASE SATISFACTION1
Share of online purchasers who are satisfied with their mobile purchase; by country, 2016

50%
54%
48%
46%
35% 35% 34%
30% 31% 30%30% 32%
25%
20%
28% 28%
21%
25% 25%
19%
14% 15%
18%
23%
A retailer's website or
app
An aggregator website
or app
An auction website or
app
A social media website
or app
A Brand specific website
or app
A messaging app
Retailer websites/apps top
mobile purchases
CONSUMER BEHAVIOR: MOBILE WEBSITES/APPS1
Types of websites/apps used by consumers to purchase online with mobile device; by region, 2016

39%
42%
46%
43%
34%
44%
39% 38%39% 38%37%
34%
32% 33%
35%
28% 27%
25%
33%
Fashion (clothing, shows,
accessories, etc.)
Tickets (events, movies, concerts,
attractions, etc.)
Toys and Games
Digital entertainment products
(stream/download music, films,
audio books etc.)
Fashion is the leading category globally for
mobile purchasing
CONSUMER BEHAVIOR: MOBILE PURCHASE CATEGORIES1
Share of consumers making mobile purchases, by category; by region, 2016
Smartphone/table game or app
50%

23%
27% 27%
29% 30% 30%
32% 33%
36%
42%
44%
Chile France Canada US Brazil Japan Mexico Australia UK China Turkey
Bank credit cards are most used payment method globally
Turkey leads in monthly online payments
MONTHLY ONLINE PAYMENTS1
Share of population making online payments, monthly; by country, 2016

24%
20% 19%
17% 16%
14% 13%
10% 9%
7%
China UK Japan Australia US Canada France Brazil Mexico Chile Turkey
China utilizes the mobile wallet payment
method the most
CONSUMER BEHAVIOR: MOBILE WALLET PAYMENT1
Share of population using mobile wallet as payment method; by country, 2016
47%

Apple 801
Google/Alphabet 680
Amazon.com 476
Facebook 441
Tencent 335
Alibaba 314
Priceline.com 92
Netflix 70
Uber 70
Baidu 66
TOP INTERNET COMPANIES1
Market value of the top internet companies worldwide, billions of USD, May 2017
Apple is the highest market value
internet company

Amazon 107.0
Alibaba 12.3
eBay 8.6
Rakuten 6.3
Zalando 3.3
Groupon 3.1
flipkart 1.5
ASOS.com 1.4
LARGEST ECOMMERCE COMPANIES1
Largest ecommerce companies (inventory, revenue generated, number of employees), billions of USD, 2015
Amazon is the largest ecommerce
company worldwide

29% 27% 26% 29% 34%
21%
15%
27% 25% 17%
23%
26%
18%
24% 24%
17%
17%
18%
13% 16%
11% 15% 12% 9% 9%
Asia Pacific North America Europe South America Middle East&
Africa
BrandPrice/promotions
Online reviews
Product features
Other
CONSUMER BEHAVIOR: PURCHASE DECISIONS1
Percentage of factors driving purchase decisions, by region, 2017
Price/promotions drive most purchase
decisions globally
27%
23%
22%
17%
5%
4%
Price/promotions
Product features
Brand
Online reviews
Newest trends or arrivals
Peer
influences/recommendations
CONSUMER BEHAVIOR: PURCHASE DECISIONS2
Percentage of factors driving purchase decisions, 2017

39% 38%
29%
27% 28%
23%
18%
30%
26%
24%
22%
19%
16%
29%
27%
30%
26%
32% 31%
26%
21%
23%
21%
17%
Clicked on the ad to find out more information Clicked on the ad to visit the advertiser's website
Checked out the product or service at another time Visited the advertiser's website another time
Clicked on the ad to purchase the product/service Shared the ad with others
Majority of consumers click on ads to find out
more informationCONSUMER BEHAVIOR: ADVERTISEMENT CONVERSION1
Share of consumers influenced by advertisements; by region, 2016

Online search for reviews and recommendations 55%
Visited the company website 47%
Visited physical stores to see, try or fit the product 26%
Spoke with my friends or family about it 23%
CONSUMER BEHAVIOR: RESEARCH METHODS1
Share of different research methods used by consumers before purchasing online, 2017
Majority of consumers search online for
reviews/recommendations

2% 1%
6%
28%
6% 6%
%13
17%
26%
23%
25% 25%
19%
18%
10% 10%
6%
29%
9%
10% 12%
%16
40%
24%
38%
29%
40%
62% 63%
South America Middle East & Africa Europe North America Asia Pacific
WeChat
WhatsApp
Instagram
Blogs
Twitter
Facebook
CONSUMER BEHAVIOR: FEEDBACK & SOCIAL MEDIA1
Most popular websites used by consumers for feedback, by region, 2017
Facebook is the most popular social media
platform for feedback

Penetration:Online shopping penetration by country illustrates what
percentage of the population has purchased goods or services
online.

Forecasted compound annual growth rate from 2018 to 2022
(statista.com)
COMPOUND ANNUAL GROWTH RATE: THE COMPOUND ANNUAL GROWTH RATE FOR ECOMMERCE SALES
BY COUNTRY INDICATES ONLINE PURCHASING MOMENTUM.

Country comparisons
The Central Intelligence Agency (CIA) has compiled key data in its World
Factbook so you can compare countries side by side. This tool offers an inside
look at infrastructure, consumption, and demographic profile, with
information like:
•Population groups segmented by ethnicity, language, and religion
•Demographic pyramids, household income and consumption, and
urbanization rates
•Mobile phone users, internet and broadband availability, and ranking
•Statistics like these can determine the total market and inform your
decisions about warehouse or inventory locations, as well as localized online
stores.
Ecommerce revenue per user (in USD) and number of users in 2018
(statista.com)

Ease of doing business
The relative difficulty of operating in foreign regions or countries is known as the ease of doing business.
Use the World Bank’s Doing Business report to supplement your country-bycountry assessments, with
considerations like infrastructure, internet speed, and bureaucracy.
Ease-of-doing-business ranking in 2018 based on the distance to frontier (DTF;World Bank)

How to test new
regions quickly, easily,
and nearly risk-free

The top mistake your business can make with
global expansion is investing significantly up
front before validating that your brand resonates
with target consumers. Initially, you need to test,
learn, and iterate.
Before launching a localized online store,
consider experimenting with a marketplace that
serves your target region or country. A total of
60% of global online sales takes place on
marketplaces.
Marketplaces are great for experimentation if you
lack brand awareness. Brand- agnostic
shoppers, those who know what but not who
they want, tend to use online marketplaces.16
These shoppers value the comparison shopping
and convenience that marketplaces offer.
Most popular online marketplaces worldwide in
2017 (statista.com)

▪ Using technology solutions from
multiple vendors can offer out-of-the-
box flexibility, agility, and customization.
All of these empower you to scale your
global operations more cheaply and
quickly than with some ERP
implementations.
•Multi-store management
• Ecommerce platforms designed to
help you scale globally make it easy to
create expansion stores to serve
specific regions or countries. An
expansion store operates
independently in the areas of reporting,
product inventory, accounting, and
order management. It’s imperative for
businesses with expansion stores to
manage them in one place.
Ecommerce software platforms worldwide in 2017 (statista.com)

Enterprises with international warehouses
might consider using a warehouse
management system to assist with managing
inventory, picking, packing, and shipping.
Mobile warehouse management systems
give you real-time analytics in the palm of
your hand and help warehouse pickers in two
ways:
• Batch picking: Pickers receive a list of items
to pick on their mobile devices and can fulfill
a single order with multiple items, multiple
orders with the same item, or multiple orders
with multiple SKUs (multiple batch picking).
• Intelligent pick routes: The list sent to a
picker’s mobile device is arranged to
maximize efficiency and minimize the walking
distance between inventory bins.

▪ Return deliveries are estimated to
cost $550 billion USD by 2020 in the
U.S., 75.2% more than in 2016.50
Ecommerce returns are growing even
faster, up 94.8% in the past five
years.51 Part of a best-in-class global
customer experience
▪ hinges on your international return
operations, or reverse logistics.
▪ Canadian consumers have long
complained about the problems they
have when returning international
purchases.
Issues Canadian shoppersface when returning online purchases (Apr 2013;statista.com)

• One of the top challenges chief
marketing officers face is targeting
content for international audiences.

• Be aware that channels that perform
well in your home country might not
be trusted, or even allowed, in your
expansion countries. Although 38% of
consumers in the U.S. say social
media influences their shopping
behavior, that number is almost double
in China despite strict government
censorship.
Internet users whose online shopping behavior is influenced by social media

•Even though Facebook is the leading social
network in 152 of 167 countries,58 consider
including competitors in your global
campaigns.
•Facebook Messenger is the most popular
messaging app in the world,59 followed by
WeChat and WhatsApp. WeChat is used
heavily in China, where Facebook
and Twitter are officially banned, although
Facebook Messenger is widely used through
consumer workarounds.
•Though not always seen as a channel,
online reviews are one of the fastest ways to
gain traction and jump-start sales in a new
market. Trustworthy reviews are one of the
top five influences on shopping behavior.60
•Don’t make the same mistake nearly 25%
of companies do.61 Instead of sending the
same email to every country, localize your
international email marketing with language,
location, currency, and imagery. Take into
account the time of year. A winter holiday
hero image of a model bundled up in a
heavy coat and scarf won’t be appropriate
for southern-hemisphere consumers in the
middle of summer.
Issues Canadian shoppersface when returning online purchases (Apr 2013;statista.com)Desktop search traffic originating from Google by country (Jun 2018; statista.com)

Supply-chain automation
•There’s a correlation between
businesses that expand internationally
and supply- chain automation.
Issues Canadian shoppersface when returning online purchases (Apr 2013;statista.com)Top factors that increase spending in supply chains (statista.com)

Though most businesses use semi-
automation72 for data-heavy
processes,73 inventory management
automation is a key growth driver for
businesses scaling globally.
Worldwide spending on robotic process
automation is expected to top $3 billion
USD by 2020.74 Although cost remains
a top barrier to implementing robotic
process automation,75 48% of
businesses that use new technologies
like automation expect it to reduce their
workforce.76
Issues Canadian shoppersface when returning online purchases (Apr 2013;statista.com)Top factors that increase spending in supply chains (statista.com)

Level 5 automation, automation with no
humans involved, needs the highest
level of machine learning to replace
human intelligence with artificial
intelligence (AI). Businesses expanding
globally expect to spend big dollars on
AI-powered automation.
Issues Canadian shoppersface when returning online purchases (Apr 2013;statista.com)Top factors that increase spending in supply chains (statista.com)Total automation and artificial intelligence operations spent worldwide from 2016 to 2021
(statista.com)

Ecommerce automation
With tools like ShopifyFlow, businesses
create custom workflows to run automatically
based on the triggers,conditions,and actions
they select.Set-it-and- forget-itworkflows
enable businessesto simplifytheir processes
and free up staff to focus on more meaningful
activities.
Ecommerceautomation not only reduces cost
and complexity,but also helps brands grow
internationally. Automation tools empower
enterprises to operate globally
with fewer internal resources.And these tools
expedite your international entry and growth
by helping you:
• Schedule changes to your online store for
major events
• Reverse those changes automatically
• List new products on multiple channels
• Tag and segmentcustomers forretention
• Streamline tracking and reporting
• Identifyand cancel high-risk orders
• Send inventory alerts forreordering and
(statista.com)
Artificial intelligence use cases by category(2017;statista.com)

Automation is also preventing one of the
biggest risks in international trade:
fraud. Nearly 60% of businesses use a
combination of ecommerce automation
and AI to detect fraud.
Detecting fraud is the first step. The real
value of ecommerce automation is
stopping fraud from happening right
after it’s detected. Learn how the
lifestyle brand Shelfies saves thousands
of dollars using ecommerce automation
to detect and prevent fraud in real time.
(statista.com)
Artificial intelligence use cases by category(2017;statista.com)

52
Ecommerce
Customers
Merchant’sSecure
Ecommerce Store
Merchant’sBank
PaymentGateway
& PaymentProcessor
Happy Merchant

53
Customer
The cardholder
initiates apurchase.
Payment Gateway
The paymentgatewayroutes
information to theprocessor.
Card Network
The card network submits
the authorization requestto
the issuer.
Card Network
The card network forwards
the authorizationresponse
to the acquiring bank.
Merchant
The merchantaccepts
the transaction.
Merchant
The merchant processes
the credit card information
and requests authorization.
Processor
The processor submits the
authorization requestto the
card network.
Issuer
The issuer approves
the transaction.
Acquirer
The acquiring bank
forwards the authorization
response to themerchant.
Customer
The cardholder receives the
purchased items orservices.

HTTPS://MAGENTICIANS.COM/TOP-PAYMENT-
GATEWAY-FOR-ECOMMERCE/
▪ Best Payment Gateways For
Ecommerce Website
▪ Authorize.Net
▪ PayPal
▪ Stripe
▪ SecurePay
▪ Payline Data
▪ Amazon Payments

One of the biggest trends in fintech today is
the rise of digital banking products like
mobile checking accounts and new debit
cards.
From Square to Paypal, a host of fintechs
are creating products that let consumers
spend money directly out of digital
accounts using a physical card.
In particular, fintechs are targeting their
young, engaged client bases, creating
products that build on their core values.
SoFi, for example, allows users to see all
their assets and liabilities in one place,
while Square uses vendor partnerships to
offer credit card-like rewards for its debit
card.
This strategy makes sense, as younger
clients are most open to trying new fintech
products: about 60% of US bank customers
say they are willing to try a financial
product from a tech firm they already use,
and that number rises to 73% for

How the products work
These companies come from diverse
fintech backgrounds — P2P money
transfers, wealth management,lending —
but all are rushing to create checking
account alternatives within their pre-
existing products.These new products are
designed to track and monitor spend,and
aim to convert monthly active users
(MAUs) into daily active users (DAUs).

CREATIVE DESIGN CATCHES USERS’ EYES
You might not expect to find the “instagrammability” trend
surfacing in the world of debit cards, but fintech
companies are hoping to draw millennials to physical
cards with colorful, minimalist designs.
Fintechs can distinguish their debit cards from traditional
bank cards through clean layouts, customization, and
heavier materials.
Personalization in card design can help buoy customer
loyalty and relationships. As chip readers become more
ubiquitous, vertical layouts (as with Venmo, Acorns, and
SoFi) are the logical card orientation of the future, and
also give cards a distinctive look.

How People Pay Around
The World And What It
Means For The Future Of
Payments

Digital lenders offer consumers faster, more transparent financing, and these online players now aim to conquer the offline market.
The emergence of new financing options at the moment of purchase is transforming consumer finance. Will these new options see payment service providers further
disintermediate traditional banks from their heritage short-term consumer-financing business?
Not long ago, the only financing options available to a consumer at point of sale (POS) were credit cards, overdrafts or bank loans. While the first two options are quick and
easy, consumers paid the price for convenience in higher credit terms. And while bank loans offered better terms, the paperwork and time involved were big deterrents.
But consumer credit is undergoing radical changes. Technology and abundant data indicate merchants and financial institutions can now offer loans at the moment of purchase,
either online or in stores. FinTechs are front-runners in the POS lending trend, where buyers make a direct agreement with the merchant for partial payment, meaning the loan
is not subject to the anti-money laundering laws of banks (and does not require additional legitimation). These FinTechs are putting banks and other traditional consumer
financing businesses under pressure.
For consumers, it’s easy to see the appeal of POS financing. It’s instantaneous and digital and can offer greater transparency on the total cost of the purchase. And this
alternative form of financing liberates customers from mainstream credit options.
For merchants, the key selling proposition of POS lending is — not surprisingly — fewer abandoned online shopping carts and higher sales. This new form of consumer
financing potentially increases conversion rates by offering consumers intuitive, seamless and error-free loan processes and delivers high approval rates for loan applicants.
After already being successful in the online world, POS lenders are increasingly aiming to conquer the offline world by repli cating the online lending experience at the real-world
checkout. This is being done through means such as direct integration into POS terminals and through mobile apps that can generate a one-time-use virtual credit card number
for universal acceptance.
Point-of-sale lending is an instant and convenient credit-granting process for consumers that is seamlessly embedded in the checkout process. Merchants benefit from
potentially higher conversion rates.
Young borrowers put technology first and expect transparency
POS lending and the digital transformation of consumer financing meet the changing expectations and habits of young borrowers. Millennials and their successors in Generation
Z are digital natives with smartphones, their devices of choice. Rather than talking to a specialist when taking out a loan, they prefer digital self-service tools that allow them to
make an informed decision best suited to their needs.
These buyers have high expectations around digital offerings that have been shaped by leading digital and technology players. POS lenders have understood this from the
beginning, and one of their hallmarks is their ability to provide a superior user experience. The rationale is easy to follow since one of the key metrics, conversion rate, is
ultimately driven by a frictionless credit-granting process.

The US card payment system involves a series of middlemen taking a cut. Digital systems, like those used in
China and Kenya, could threaten banks and other players.
Payments systems vary across the globe, from cash-based economies to those driven by credit. The way
consumers pay in the US, for example, might seem obsolete to consumers in other countries.
In Kenya, anyone with a mobile phone — smartphone or not — can use M-Pesa to send money, pay for things,
and access credit. The service is used by almost all adults in the country.
More importantly, users don’t need a credit card, bank account, credit history, or minimum balance to open an
M-Pesa account. Instead, they provide cash to any one of thousands of independent cashiers to top up their
mobile wallets. This effectively circumvents Kenya’s limited banking infrastructure — a boon for financial
inclusion and commerce.
In contrast, mobile payments in the US have yet to catch on.
This isn’t due to a lack of mobile devices (according to the World Bank, the US had 123 mobile cell
subscriptions per 100 people in 2016), nor is it due to a lack of offerings — a study in the same year found that
88% of US consumers were aware of Google Pay, but only 14% had tried it.
Rather, banks and payments providers have established a system that’s worked — and is still working.
Consumers like credit card perks, merchants have bought in, and banks and payments players are happy to
provide the infrastructure in exchange for a piece of the pie.

UNDERSTANDING THE CREDIT AND DEBIT CARD VALUE CHAIN
In the United States, 93% of consumers have some sort of bank account. Virtually all US private
sector wage earners receive wages into bank accounts, according to the Global Findex database,
which are insured by the FDIC and offer an easy way to earn interest.
Users of the traditional financial system can also build credit and access credit instruments, like
credit cards. Banks are happy to offer credit cards to their customers — they’re highly profitable,
and consumers like their convenience, among other benefits.
The credit card system involves a number of different parties that allow consumers to pay using a
line of credit. Banks, payment gateways, payment processors, and card networks (among others)
establish a web of trust between customers and merchants. For their services, these middlemen
charge fees.
In the scenario below, five middlemen — the issuing bank, payment gateway (or point-of-sale
terminal provider), payment processor, card network, and acquiring bank — establish trust and
take a cut.

From Point-Of-Sale To Money
Transfers: 109 Startups
Disrupting The Payments
Industry

From point-of-sale solutions to money transfers, payments makes up one of the largest categories within
the larger fin tech industry.
Payments startups have been seeing considerable momentum, and are on track for $3.8B in funding this year.
From point-of-sale solutions to money transfers and mobile payments, these startups are changing how electronic
payments are made, accepted, and processed.
We used CB Insights data to identify 109 private companies in payments and mapped them according to the nine
main categories where they’re operating. The 109 payments startups included are addressing general payments
needs as well as a range of payments market niches, including bitcoin-powered payments, mobile commerce, and
specialized consumer-focused payment markets like child support or in-restaurant payments.

The breakdown is as follows:
Online payment services: Startups including Stripe and WePay that help businesses move their payments-
processing online and make it more available, secure, and inexpensive.
Billing automation and streamlining: Zuora and Paymentus, among others, streamline invoicing and automate
financial processes and billing.
Point-of-sale payments: iZettle, Revel Systems and others offer point-of-sale products and services, including card
readers, stands, and digital storefronts. These startups compete with now-public Square in some segments,
although Square has put more of an emphasis on small business lending and financial services more recently.
Personal payment services: Companies like MobiKwik and Affirm focus on providing consumers with more
convenient payment platforms. Some of these companies focus on particular consumer niches.
Bitcoin payments: Companies like Coinbase and BitPay that use digital currency to make payments faster and more
secure.
E-commerce payments: Klarna and other startups focus on the e-commerce market with payments solutions geared
to the challenges seen by online merchants. Klarna, for example, extends instant credit for online purchases to
consumers without them having to provide payment details, easing the friction involved in completing an online
transaction.
Connected card payments: Companies like Coin and Stratos are betting that all-in-one connected credit cards will
be a key link in the payments value chain.
Money transfer services: TransferWise and Remitly provide digital solutions for sending money across borders
quickly and cheaply.

Square facilitates transactions between buyers and sellers with its free credit card reader for the iPhone,
iPad, and Android devices, allowing anyone to accept credit cards anywhere. Square Register serves as
a full point-of-sale system for businesses to accept payments, track inventory, and share menu and
location information. Pay with Square is a seamless way to pay, enabling individuals to pay with their
names at local merchants, discover nearby businesses, explore menu listings, and store receipts.

Twitter @Square 247.96k followers

Cash Flow Statement 12/31/2018 12/31/2017 12/31/2016
Net Income (Starting Line) (38.45) (62.81) (171.59)
Depreciation 60.96 37.28 37.74
Deferred Taxes & Investment Tax Credit (0.65) (1.38) 0.06
Other Funds (Non Cash) 319.07 237.28 189.97
Funds from Operations 340.94 210.36 56.19
Extraordinary Item - - -
Changes in Working Capital (45.86) (82.64) (33.05)
Net Operating Cash Flow 295.08 127.71 23.13
Capital Expenditures (62.79) (26.1) (25.83)
Net Assets From Acquisitions (112.4) (1.91) (1.36)
Sale of Fixed Assets and Businesses - - 0.3
Purchase or Sale of Investments (730.66) (312.6) (87.34)
Other Uses - - -
Other Sources - - -
Net Investing Cash Flow (905.85) (340.61) (114.24)
Cash Dividends Paid - - -
Change in Capital Stock 245.98 219.75 90.91
Issuance or Reduction of Debt, Net 459.75 334.68 (0.17)
Net Financing Active Other Cash Flow (189.97) (99.49) -
Net Financing Cash Flow 515.76 454.93 90.74
Exchange Rate Effect (7.22) 4.3 (0.44)
Miscellaneous Funds - - -
Net Change in Cash (102.23) 246.34 (0.81)
Free Cash Flow 233.88 101.61 (2.3)

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ey.com
cbinsights.com

Ecommerce Industry Market Overview

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