Expectation to reality increasing consumer confidence in online trading
by Phil Smith
Despite all of the hype and sales effort that has gone into the creation of effective online payment facilities, the proportion of people actually using them remains disappointingly low. Now that we are entering an economic slowdown of unknown duration, most service providers and retailers who have spent vast sums in making the payment facilities available, can expect an ever-lengthening period before they start to see a return on their investments.
Phil Smith, Sales and Marketing Director for Bucks.Net, a leading UK internet solutions provider, and one of Europes only 35 E-payment gateways looks forward to the ongoing issues that will affect online payment and draws some interesting conclusions.
Confidence in the security of transactions will remain the biggest problem that online payment has. In banking terms, customer not present, transactions have always posed the highest risk and have attracted high commissions to compensate. Add to this the almost gleeful delight with which the Press jump to highlight any case of online fraud and it is no wonder that the public still view credit card use over the Internet with the utmost suspicion.
Smith harbours a notion that this is partly age and partly knowledge driven. Given the impersonal interface that is presented by the typical PC and online payment page, many people are put off by the lack of personal reassurance that what they are doing is right and that their consumer rights are adequately protected. Recent research by Roper ASW Europe has shown a wide gap between online research and online shopping amongst European consumers.
What is strange, says Smith, is when you consider the way that millions of us are prepared to phone up a florist and gaily spend £20 or £30 to send someone flowers, sight unseen, verbally volunteering our credit details over an unsecured telephone line. We have no idea or means of monitoring the honesty of the person taking down our details and have no comprehension of how these details are used or where those records are stored.
Compared to this example, the transmission of credit card details over the Internet, through encrypted algorithms, to secure databases, often with no direct human handling and thereby avoiding risk of error or fraud, seems positively cast iron, Smith reckons.
Until the repeated entering of payment details online is made easier or even transparent, many people who are today 40 or over will likely choose to use any other means available in preference.
UK Government initiatives, for instance making tax returns and all local authority payments possible online, may help lead the horse to water, but the take up will still be slow. Much has been made of the lack of broadband access keeping a lid on internet use but the truth is that except, for the downloading of large image and audio files this will have little material effect on the majority of online transaction opportunities.
Looking to the future, there are at least three online address verification systems in development that will enhance levels of transaction security and give even further reason for confidence. It is also inevitable that Government will get around to promoting online payment once their pre occupation with broadband is spent. However, in the meantime the online solutions providers are likely to experience a round of sweeping consolidation in which only the dynamically strong and financially fit will survive.
Being relatively focused and far less financially exposed, Smith concludes, I expect our company to ride out this period and in so doing play its part in bridging the gap between yesterdays expectations and tomorrows reality.