- Category: November - December 2009
Did you know that online shopping pre-dates the internet, the IBM PC and Microsoft? You don’t believe it? But it’s true! The process of purchasing goods and services over the Internet was actually invented in the UK in 1979 by Michael Aldrich of Redifon Computers, who connected a modified 26" colour television to a real-time transaction processing computer via a domestic telephone line. We all know that only years later, in 1990, Tim Berners-Lee created the first World Wide Web server and browser, but it took another 4 years for developing more technical advances, such as online banking and the introduction of SSL encryption of data transferred online, that has become essential for secure online shopping.
Since then online shopping has become unstoppable and is now a thriving vending machine.
According to MasterCard, the strong growth trend of online shopping appears to have held up well in the Asia Pacific, in spite of the global crises, and the overall potential of e-commerce is immense in the region. Generally, users in Asia Pacific perceive online shopping to be convenient (71%) and easy (66%), with 62% of the respondents claiming that online shopping is easier than shopping via offline catalogue and telephone. The fact that in most markets surveyed, there has been an increase in the frequency of online shopping as well as some increases in the spending total, could lead to the conclusion that the economic crises could have made online shopping more attractive. One key reason may be that comparing prices is easier when shopping online, hence achieving the important objectives of “value for money”. However, past research has consistently shown as well that during times of economic downturn, consumers may or may not cut back on their spending, but invariably tend to shop wisely. Recalling that the cyberspace is right now full with 1.6 billion potential buyers and counting, a lot of progress in this field can be expected.
However, further MasterCard’s research showed that a number of respondents (33%) in the region do not feel safe shopping online, with an especially high proportion (50%) among Thai and Chinese shoppers. The survey also states that online shoppers in more developed nations such as South Korea (26%) and Japan (31%) are not as fearful as online shoppers in developing countries and that most important to Asia Pacific online shoppers are secure payment facilities (87%), price (87%), and convenient payment methods (85%).
China offers the largest potential online shopping market in Asia Pacific, which is projected to increase to 480.4 million and contributing 58.6% of the total online shopping population in the region. Meanwhile, India’s online shopping population is poised to increase rapidly and overtake Japan and Korea in terms of shares. Compared to a few years ago, online shoppers seem to be in general more satisfied with their online-shopping experiences than ever before.
Security and value for money are the two most important factors for online shoppers, followed by the reputation of the website and the belief that there should be no extra charges for the use of different payment and delivery methods. User-friendliness and the speed of transaction were also deemed important.
Convenience and ease of use are definitely the main factors triggering the use of credit cards for online purchase in the region. So, the most preferred method of online payment for consumers in the Asia-Pacific region was indeed found to be credit cards, with the exceptions of China and Thailand where the debit card is more preferred for online purchase, according to MasterCard’s survey.
Asian e-Marketing got a chance to talk to Mr. Garth Viegas, Vice President, Intelligence & Planning, Asia Pacific, Middle East & Africa of MasterCard Worldwide about the implications of credit card services on e-commerce. In short he summarized the real value of online credit card payments as follows: “For cardholders, the ability to make online payments with their credit or debit card provides them with more choice and convenience. Cardholders have immediate and wide-ranging access to goods and services across the world via online shopping sites and they can compare prices and shop for the best deals from the comfort of home or on the move.”
When provocatively asked, if he thinks that online shopping would be just another way for retailers to squeeze more revenue from buyers or if he would really see it as the trade model of the future, he added: “All kinds of retailers now have an online store – from your local supermarket to luxury fashion brands. It’s a natural and necessary extension of their businesses, because people are becoming more comfortable shopping online. For retailers, an online shopping portal creates access to new customers domestically and overseas, and incremental sales from existing customers.”
Having such a terrific expert at hand I asked of course the most burning questions regarding the ever-evolving cybercrime threats his industry is challenged with and how MasterCard tries to increase consumer confidence in using credit cards when shopping online. According to Garth Viegas “MasterCard views protection of merchants and cardholders from fraud as a top priority and is continuously creating products and programs to combat it at all stages of the payment process - before, during and after a payment transaction occurs. The company has developed an array of merchant education programs and security standards, network-based security systems, security features on the cards themselves, and special protections for online transactions.” He added: “On a larger scale, MasterCard continues to help the industry work together to pioneer innovative security technologies and practices to make the future of payment transactions even more secure”. Further he recommends that cardholders should also exercise reasonable vigilance when transacting with their credit cards online and try to shop only at reputable sites, advising: “If an online merchant is new to you, run a research on the company and beware of merchants with bad reviews. Make sure you use a secure web site to enter your card information. Look for a padlock symbol in the bottom right of the browser window and for the website address to begin with ‘https://’, as these are indicators of a secure server.”
MasterCard declared consumers, concerned about the security and safety of their online payment transactions, as the primary barriers credit card companies have to overcome. So, years ago, in spring of 2001, the company announced a solution to assist online merchants in defending against Internet hackers with their MasterCard Site Data Protection Service™, a multi-tiered, comprehensive set of global e-commerce and financial security services that identifies possible vulnerabilities in online systems and makes recommendations for short-and long-term security improvements. The solution addresses the security issues that online merchants and their acquiring banks face in the virtual world - including Internet fraud that leads to charge-backs, damage to brand image, and consumer concerns about the safety of their account numbers. Unlike other hacker prevention services that are referral-based, MasterCard delivers SDP directly to its acquiring customers, who in turn will offer the service to merchants. Further, they offer special protections for online transactions with MasterCard SecureCode, hat enables consumer to secure their payment at thousands of online stores worldwide in a simple way. A private code known only to the cardholder and the bank – the SecureCode - enhances the existing MasterCard card by protecting the cardholder against unauthorized use of his card when shopping online at participating online retailers. Although many financial institutions offer SecureCode, not all offer that specific service. So if you are interested you should ask your bank whether this service is available.
Fact is, the increasing usage of internet will tend to result in a more favourable attitude towards online shopping in the future as it is already reported that countries with higher internet penetration rates in the Asia Pacific have higher online shopping penetration rates. Garth Viegas only confirmed it with his prediction for the future when it comes to online credit card payment in Asia, saying: “In most of the markets surveyed, there has been an increase in the frequency of online shopping as well as some increases in the spending total. This trend looks set to continue as the internet is now part of everyday life and consumers regard it as an indispensible tool to get information about the items they are purchasing and compare prices, as well as a convenient and safe channel to shop.”
Although online shopping is still in its infancy in Asia, we all know that its popularity will grow. It will happen even faster when all obstacles are out of its way - especially security concerns. MasterCard works hard to shape the future of e-commerce and payment methods by pushing the industry forward.
By Daniela La Marca