Online Credit Card Security Fears Waning, But Still a Factor

A new report by Forrester Research, Inc. found that despite growing consumer comfort with online credit purchasing, the fear of using plastic on the Internet is still the largest obstacle to e-commerce.

According to the report, consumer worries about credit card security have been dropping since early 1998. Forrester examined this trend through three surveys: 120,000 households interviewed in early 1998, 95,000 households in early 1999 and 10,000 online households in July 1999.

Consumer Concern Has Fallen

In 1998, just 15 percent of online households felt safe using their credit cards for online purchases. In the most recent study, this number rose to 53 percent. Furthermore, the percentage of consumers who feel that the Internet is not a secure place to use a credit card has plummeted from 71 to 40 percent.

The survey also found that the longer consumers are online, the more comfortable they become with credit card security. However, this fact alone doesn’t explain the waning security fears: 71 percent of consumers who were online for 6 to 12 months in January 1999 felt insecure using credit cards via the Internet. By July, this percentage dropped by 53 percent for consumers who were online for the same length of time.

Security Fears Still Choke E-Commerce

While security fears plummet, Forrester’s survey found that 83 percent of consumers who have never shopped online still cite concerns over credit card security as the main reason for not buying online.

According to Forrester, these consumers are driven by a fear of technology snafus and untrustworthy e-tailers. The primary worry is that credit card information can be stolen during transmissions from a PC to an e-tailer. Additionally, 79 percent of those surveyed said that they didn’t trust online merchants to safeguard this information — while 53 percent feared giving their card numbers to e-tailers with no brick-and-mortar presence.

Nonetheless, general apprehension or bad experiences aren’t entirely to blame. Forrester discovered that just 25 percent of skeptics say that they are generally wary when using a credit card for any type of purchase. A small group — 4 percent — points to a prior bad experience as the reason for not buying online.

How Can It Be Fixed?

Forrester asked reluctant consumers to identify what would make them more likely to use their credit cards online. After reviewing their answers, Forrester has come up with four ways that e-tailers can lessen consumers reluctance to shop online:

Seventy-five percent of the skeptics say that knowing they were using a “secure server site” would make them feel more comfortable. In addition, 48 percent would feel better if e-tailers also had some sort of brick-and-mortar presence to make returns easy.

Forty-one percent of those surveyed by Forrester said that they would like to see online merchants adopt a money-back guarantee before they would be willing to use their credit cards online.

Finally, 45 percent of the consumers interviewed said that their fears would be eased if e-tailers displayed positive testimonials from satisfied customers on their Web sites.