Blog Title: The Collective

It’s hard to put a price tag on security and privacy, but a recent study of consumers’ online and mobile purchasing attitudes conducted by Javelin Strategy & Research and PaymentOne (www.paymentone.com) found 4 out of 5 consumers would spend more online if offered an easier and more secure way to pay. The survey also found that by a margin of almost 4 to 1, consumers believe direct carrier-billed mobile payments are more secure than using credit and debit cards for online digital purchases.

How much more would consumers spend if they didn’t have to share their sensitive personal data or type in a long credit card number to complete their purchase? The Javelin survey finds that online merchants could add aggregated yearly revenue of $109.8 billion, simply by offering an alternative “no-credit-card-required” way to pay at checkout.

Conducted this fall, the 2011 Consumer Payment Poll revealed that consumers have dramatic and growing concerns about the safety and privacy of using credit or debit cards for online transactions. More than half of consumers surveyed admitted to abandoning online purchases at check-out because of these concerns, confirming a huge loss in potential revenue for online merchants.

Majority of consumers would buy more if online payments were safer

4 out of 5 consumers polled would spend more online if given an easier and more secure payment alternative to credit or debit cards. This indication of pent-up demand and lost opportunity for commerce was consistently high across a wide range of segments such as age, ethnicity, income, geography, early/late adopters of technology and gender, with certain demographics, including higher income, younger and minority segments displaying an even higher demand for easier and safer payment alternatives. Nearly 6 in 10 consumers are more likely to visit and buy from sites that offer “no-credit-card-required” payment options. Survey results further indicated that digital merchants could realize incremental average monthly revenue of $89 per consumer simply by increasing the available payment choices.

“According to the 2011 Online Payment Poll, consumers are concerned about the use of credit cards online and related issues of privacy, fraud, security and convenience,” said Phil Blank, Managing Director at Javelin Strategy & Research. “If digital merchants simply offered consumers an alternative way to pay, such as mobile carrier-based payments, 79 percent of decisive consumers indicated they would spend more, driving significant new incremental revenue from subscriptions, transactions and purchases. With an estimated $110 billion in new revenue for digital merchants being left on the table each year in the U.S. alone, this ‘commerce gap’ represents a massive untapped opportunity.”

Consumers are afraid to use their credit cards online

Survey respondents voiced extreme concerns around using credit cards to shop online, especially for smaller digital purchases. Privacy and security topped shoppers’ concerns listed below:

• I’m concerned a merchant or website will start sending me junk mail (55 percent)
• I’m concerned my personal information will be sold to other merchants (54 percent)
• I’m concerned my credit card information will be intercepted (51 percent)
• I’m concerned unauthorized parties will access my personal information stored by merchant (51 percent)
• I’m concerned my credit card information will be misused by merchants (41 percent)
• I don’t like the idea of providing private or personal financial information (38 percent)
• I worry that my personal financial information could be intercepted over the air when I enter it using my phone (32 percent)

Shoppers’ security and privacy concerns were universal across all age groups and income ranges, indicating that the vast majority of online consumers, regardless of their socio-demographic status, would be inclined to purchase more online if their security and privacy concerns were addressed with “no-credit-card-required” safer and more secure billing options.

“Consumers’ concerns around the security and privacy of online payment transactions are staring digital merchants in the face and demanding attention,” said Brad Singer, executive vice president, PaymentOne. “In today’s economy where every cent counts and every customer is vital to the success of a business, merchants clearly need to do more to ensure customers aren’t scared away when it comes time to check out. The implementation of new consumer-friendly alternative payment options may well be the single most important step merchants and publishers can take to grow their customer bases and their revenues.”

Carrier-billed mobile transactions top alternative payment options

300 percent more survey respondents perceived carrier-billed mobile transactions, where financial information is never shared or loaded onto the phone, to be safer than “mobile payments” requiring consumers to input credit or debit card info. Consumers identified the wireless bill as the preferred method (58 percent), followed by the landline/broadband bill (22 percent) as the safest and most secure alternatives for digital purchases. The survey found strong interest for safer payment methods across all socio-economic strata, but the interest is greatest within households earning greater than $75,000 per year.

Mobile payments are the future

95 percent of survey respondents have mobile phones, yet just 36 percent have already used them to make a payment. The 2011 Online Payment Poll finds strong interest for using a mobile phone for payments beyond subscriptions, service bills and mobile apps. Among consumers who have used their mobile devices to make payments, nearly one in four have purchased digital entertainment; one in three purchased entertainment tickets; and approximately one in four purchased travel and apparel. Merchants deploying additional payment options, including mobile payment options that enjoy strong consumer interest, can reach and convert more potential consumers and capture millions of dollars in additional revenue.

About this survey

Commissioned by PaymentOne, the poll results were published by Javelin Strategy & Research in December 2011. Conducted in September 2011, the poll surveyed over 2,000 U.S. consumers regarding their online payment preferences for digital content and services. Games, mobile apps, music, streaming media and entertainment, software, security services (e.g., antivirus and anti-spam), subscriptions, Internet services (e.g., Wi-Fi), console games, and related premium services were among the top categories consumers were interested in purchasing.