Magazines Archives - 2007 May
Australians still hampered by payment systems despite rise in online shopping
ONLINE shopping is growing in popularity among Australian consumers, as total annual online shopping jumped 63% in 2006, said a report released by market research company ACNielsen.
According to the report, Australian consumers spent A$12.5 billion (US$10.1 billion) in online transactions last year, or an average annual expenditure of A$2,100 per person.
Further, eBay Australia said it signed its five-millionth Australian member last February, adding that a car gets sold every 12 minutes and 27 seconds on average, while a piece of womens clothing is sold every 13 seconds on its site.
Local online payment company Centricom, on the other hand, believes consumers are still held back by payment inadequacies, and a general mistrust of online payment systems.
Unfortunately, eBays stellar performance is in stark contrast with the sluggishness of the rest of the online shopping market, where growth is being held back by a lack of trust in using online payment systems and a lack of choice for merchants and consumers, said Centricom CEO Simon Warner. It is instructive that eBay offers a broad choice of payments such as PayPal, whereas most shopping sites only allow the use of credit cards.
According to ACNielsen Consumer Banking Report of December 2005, 29% of those aged between 40 and 55 still do not trust the Internet with their credit cards, while 47% of non-online shoppers in the 15-24 age group do not own credit cards at all.
Philip Lowe, assistant governor (financial system) of the Reserve Bank of Australia, said credit cards being used online typically incur higher fees, which eventually get passed on to consumers in the form of higher prices. He also said online transactions run the risk of fraud with some sites effectively barring those without credit cards or who prefer not to use them online.
Instead, Lowe suggested using an online debit system, describing it as relatively simple, and where the merchant is not exposed to the fraud risks associated with accepting credit cards online and generally pays lower merchant service fees on these transactions. Online debit also allows the merchant to sell goods and services to consumers who do not have a credit card.