In its second-largest acquisition, Amazon buys the company for $970 million.
By letting leery online customers pay by check, money order or by phoning in card information, Amazon.com taps into an $8 billion market of lost e-commerce sales.
Only 3.4% of consumers surveyed by Jupiter Research Inc. say that their credit card information had been stolen online and fraudulently used in the past year, yet consumers’ concerns about credit card security online remain high and are rising. The 18% of non-buyers online polled in 2000 who said nothing could make them comfortable enough to make an online purchase doubled to 34% in 2002.
However, 51% of non-online buyers polled say that better security of their credit card and personal information would prompt them to make online purchases. Since consumers have cited the fear that unauthorized access to credit card information stored in a merchant’s database is the chief concern preventing them from purchasing online, merchants could address this by actively marketing the security of their systems in locations throughout the transaction process where shoppers waver, such as shopping cart abandonment hot spots, Jupiter suggests.
Seal programs such as VeriSign’s give some reassurance about polices and practices on the site, but online shoppers who still aren’t convinced should be given the opportunity to pay offline, Jupiter suggests. “If a consumer has shopped online but is hesitant to give a credit card number online, the retailer should try to close the loop by taking payment information over the phone without requiring the customer to start the order process all over again,” says Jupiter analyst Rob Leathern. While taking other order details online, Amazon.com, for example, lets customers send a check or a money order to a physical address or call in their credit card number if they prefer, Leathern notes.
In the future, he suggests, merchants might originate a call to a shopper’s home phone number to complete payment and add an extra measure of security by matching phone number to the credit card issuer’s records. While initiating such programs could entail costs for a retailer, the upside could be significant: Jupiter estimates that $8 billion in e-commerce opportunities will be lost this year alone from consumers who refuse to buy online due to concerns over the security of credit card and personal information.