February 1, 2007, 12:00 AM

Worried about fraud, German and Swedish online buyers avoid payment cards

Most Swedes and Germans prefer cash-on-delivery and bank transfers for online payments because of fear of fraud. But card users spend more online, so retailers can boost sales if they convince consumers of payment card security, JupiterResearch reports.

Credit and debit cards are the most commonly used form of payment for online purchases in most of Europe, but concerns about online payment security help keep traditional methods such as bank transfers and cash-on-delivery at the top of payment methods for online purchases in Germany and Sweden, according to a report by JupiterResearch Inc. Users of traditional payment methods worry more about online fraud than do users of payment cards, the report says.

But because users of payment cards spend more online than users of other methods like cash-on-delivery and bank transfers, merchants can boost sales by addressing concerns about online payment fraud with information on security policies that protect cardholder information-and convincing more consumers to use payment cards, according to Jupiter’s report, “European online retail: Understanding the payment behavior of online buyers.”

63% of European online shoppers have used credit and debit cards to pay for purchases made at online merchants. By contrast, 56% of online payers in Sweden and 69% in Germany use options like cash-on-delivery and bank transfers as their preferred online payment methods. Jupiter’s data showed that overall, 26% of European online buyers favoring traditional payment methods are worried about online fraud. By contrast, only 16% of those who pay online with credit or debit cards expressed concerns about online payment security.

“Traditional payers are more concerned about online fraud than are other payers,” Jupiter says. “Online retailers in countries with a high penetration of traditional payments can take advantage of e-commerce security labels to create trust and increase conversion.”

Jupiter’s study also found that electronic payments are growing in popularity in some countries. 22% of European online buyers use e-payment methods specific to the Internet, such as PayPal, according to Jupiter’s data. 21% of Europeans who have used e-payments to buy online have expressed worries about online fraud.

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