January 23, 2003, 12:00 AM

Substitute card technology drives higher spending online, says eMarketer

Cardholders using Orbiscom’s CPN option boosted online purchasing by an average 220% in 2002 from 2001, says research from eMarketer.

 

Online shoppers that use substitute card technology spend two to four times more than those who use traditional cards, according to data from research firm eMarketer Inc.

The technology, offered by providers such as Orbiscom Inc. under its Controlled Payment Number product, aims to protect online shoppers from potential misuse of credit card numbers by online hackers by allowing users to generate a unique card number for each online purchase. The actual number of the credit card the consumer uses to make the purchase is thus never revealed.

On average, cardholders using CPN technology as offered to consumers by major card issuers including Discover, Citibank and others, increased their online spending by 220% over the second and third quarters of 2002 from the same period in the previous year. By contrast, online shoppers not using the technology increased spending during the same period year to year by only 29%, according to eMarketer.

CPN users who spent $101 to $200 during the two quarters tracked in 2001, for example, increased online spending by an average $658 in 2002, a four-fold increase. Shoppers using the technology who spent more than $1,000 online in Q2 and Q3 2001 increased spending by an average $1,184 in 2002, more than doubling online spending.

The results disprove a widely held notion that avid Internet purchasers have overcome fears of having credit card numbers and other personal information stolen or misused, according to Orbiscom. “Secure, convenient and flexible pay applications such as CPN give online shoppers an added boost of confidence to shop more and spend more” says Diane Shaib, executive vice president of U.S. operations at Orbiscom.

 

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