Online spending ‘could hit £39bn by 2010′

Customers using their credit cards to purchase products online are contributing to soaring levels of internet spending, with payment system PayPal reporting that web expenditure could hit £39 billion a year by 2010.

According to the company, a quarter of the UK retail sector operated online in 2005, compared to seven per cent in 2004.

It is estimated that there will be 24.9 million online shoppers in 2010 – a 71 per cent increase compared to last year – accounting for 49 per cent of the adult population of the UK.

Food and groceries are set to be the most lucrative online shopping sectors in four years time, accounting for 30 per cent of the online retail market, followed by the clothing and footwear market.

However, PayPal points out that this expansion could not be good news for all, as some small businesses may fall behind as large areas of custom move to the web.

“Over the past few years we’ve seen the internet gradually eating away at the high street,” said Carl Olav Scheible, head of merchant services at PayPal.

“Retailers are realising that they need to provide an impressive ‘online shop’ to stay ahead of the game and find the success they are looking for.”