PayPal gaining ground on credit cards

Though the number of consumers who take on credit card debt to make online purchases is still significant, another payment system is gaining popularity.

According to a new survey from market research firm Cardbeat, PayPal has grown in both market penetration – over three-quarters of respondents said they had an account – and popularity as a payment method. While 70 percent of respondents said they still use their credit card to make online purchases, a growing number – 39 percent – said they use PayPal as well.

The report said that consumers are also using the service more often, though they’re spending the same amount per transaction. While the average purchase is still about $60, the same amount consumers reported when Cardbeat last conducted such a study in 2008, the number of transactions has nearly doubled from 10.8 two years ago to 21.2 now.

In the past, many consumers used PayPal primarily as a means of paying for their eBay purchases, but the system has grown over the last few years, and is now accepted by a large number of online shopping sites.