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Consumers ready to spend more online if banks offer safer payments

01 July 2009  |  2756 views  |  0 Source: Nyce Payment Network

Consumers who limit their online shopping say they would make more purchases online if their financial institution offered them a safe payment method. This is according to research commissioned by NYCE Payments Network, LLC, a leading U.S. electronic payments network and a Metavante (NYSE:MV) company. Metavante is a leading provider of banking and payments technology.

The research, conducted by marketing research firm Analytica Inc., surveyed 2,608 consumers for their attitudes about shopping online and their reasons for choosing the payment methods they use. The findings indicated that consumers remain concerned about the security of their personal information when shopping online:

* Of respondents who had never purchased on the Internet, 43.5 percent gave security concerns as the reason.
* Among those who rarelyshopped online, 26.4 percent cited security as the reason they did not do so more often. Security was the second most commonly cited reason, behind a preference for the in-store shopping experience.

Market exists for financial institution payment offering

The NYCE study asked whether respondents would be interested in trying a secure payment method offered by their financial institution. Even those who rarely or never shop online now indicated interest in such a solution:

* Eighteen percent of those who had never purchased anything online indicated they would likely try online shopping using a secure payment method offered by their financial institution.
* Among those who rarely shopped online, 27.6 percent indicated they would likely make more purchases using such a method.
* Nearly half (49.9 percent) of the frequent Internet purchasers who were reached for the survey online indicated they would consider replacing their current method with one offered by their bank or credit union, as long as they felt it was safe and secure.

"We have found that consumers are not necessarily loyal to the online payment options available to them today," said Steve Rathgaber, president, NYCE. "This is good news for financial institutions that would like to keep consumers' demand deposit accounts central to their payment relationships. Offering an online payment method gives institutions the potential not only to generate new revenue by encouraging consumers to make more purchases, but also to solidify their reify treify their relationships with the people they serve."

In 2008, NYCE introduced SafeDebit™, a secure Internet purchase solution. The SafeDebit solution enables consumers to pay for Internet purchases directly from their deposit accounts without disclosing their debit card information online. The system validates shoppers through their online banking credentials, and generates a pseudo card number for one-time use on a merchant's site.

Methodological Notes

In late 2008, marketing research firm Analytica Inc. surveyed 2,608 consumers regarding their behaviors and preferences related to Internet purchases, as well as their interest in SafeDebit™ — a new Internet purchase payment method from NYCE. The surveys were partitioned into two samples:

1. 1,608 surveys came from a stratified random sample of a population of U.S. e-mail addresses, conducted over the Internet.
2. Using the same survey questions, 1,000 interviews were conducted over the phone with a U.S. representative RDD (random digit dialing) sample.

Both samples were representative of the U.S. population by geography, ethnicity, age, income and gender. Surveys were completed between December 2008 and February 2009.

By conducting a portion of the survey using RDD and not limiting it to Internet users, Analytica was able to eliminate an Internet bias and determine whether there are individuals that would like to purchase (or purchase more) on the Internet but don't do so because they are not happy with the payment alternatives currently available.

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