e-commerce analysis

Published on: 11/01/2007

e-commerce still on the increase, but continual development necessary to overcome payment fears.

The number of web-based shoppers increased by four per cent between 2005 and 2006, but people are still opting for a mix of both online and offline payment.

Businesses with an online arm must offer a wider variety of electronic payment options, particularly those targeting European customers as preferred transaction methods vary from country-to-country. While more than half (56%) of European web users regularly shop online, many of them are snubbing online payment methods, according to a report published this week by analyst Forrester Research.

In the past three months, 64% of net shoppers favoured electronic payments, while just under a quarter (24%) went for purely offline methods of paying for their goods. Some 13% of buyers opted for a bit of both.

However, the UK is more advanced than its European counterparts when it comes to embracing online payment. Despite Germany being hailed as Europe's second largest online shopping market, just 26% use credit cards as their preferred buying tool, compared to 60% of UK shoppers. PayPal also rates highly with UK purchasers, with more than a third (35%) citing the payment method as one of their favourites.

To encourage shoppers to ramp up their online payment activity, it is suggested that retailers and other businesses reassure consumers about security by making the safe nature of their shop clear on the home page. Also, e-organisations should offer new online payment options for those who want to pay in that way but are wary of disclosing personal financial data. To combat these fears, companies should follow the example set by Germany and the Netherlands. Both have made headway in this area with their respective giropay and iDEAL initiatives. The former makes online payment much easier, while the latter is a collaboration between major banks and enables consumers to pay for goods directly using the familiarity of their own bank's trusted online banking system.

Making it easier and more appealing to pay for goods online will be a win-win situation for retailers and consumers alike, as the seller is guaranteed payment, while the buyer just has to approve the transaction and enter a PIN before receiving confirmation from their bank.