Alternative Payment Options:

Converting Hesitant Shoppersinto Confident Spenders

a report from

eBillme2207 Concord Pike, #510Wilmington, DE 19803-2908866-365-6632www.eBillme.com

1EXECUTIVE SUMMARY2ABOUT THE STUDY3 1.0 THE HESITANT SHOPPER3 1.1 Protection from Fraud: Perceptions and Liabilities4 1.1.1 Credit Card Liability5 1.1.2 Debit Cards and Hidden Costs6 1.2 Identity Theft - A Growing Concern6 1.3 Consumers are Looking for More8 2.0 THE MERCHANT PERSPECTIVE8 2.1 The Merchant Opportunity8 2.2 The High Cost of Fraud9 2.3 Attracting the Customer9 2.4 Reducing Costs9 2.5 Cash-based Payment Options11 3.0BRINGING ONLINE BANKING SECURITY TO THECHECKOUT12 4.0BUILDING CONFIDENCE14CONCLUSION15FURTHER ONLINE RESOURCES

CONTENTS

The 2008 holiday shopping season was one of the most challenging for retailers in decadesaccording to MasterCard’s SpendingPulse1report on national retail and service sales.Online spending, however, showed relative strength declining only 2.3% compared with atotal retail sales decline of 5.5%-8% from 2007. This resiliency and relative health is anindicator of the ever-growing importance of e-commerce. The financial crisis has made iteven more crucial to target online channels. To fully take advantage of online shopping, it is important for merchants to optimize theirweb experience to overcome customer barriers. Shopper hesitancy and shopping cartabandonment remain challenges as overall conversion on merchant sites remains low,averaging 2%-3% depending on the industry. Merchants with the highest conversion ratesare those who go beyond using traditional Web analytics data to truly understand theircustomers’ needs, perceptions and concerns.Jupiter Research conducted a study, commissioned by eBillme in late 2007, evaluatingconsumers’ concerns and considerations when selecting a payment method at thecheckout and identified key customer barriers. This study found that fraud protection is themost important consideration for consumers when selecting online payment options. Aperceived lack of security when entering personal and/or financial information onlinecontinues to pervade the customer experience. Additionally, though fraud is a primeconcern, over 60% of credit and debit card users are confused as to their maximum liabilitycoverage and could be caught unawares. As consumers become more experienced, theyare likely to align with options that do more to protect them.Merchants have an opportunity to provide the security and confidence that onlineconsumers seek by embracing options that promote transparency and trust. According tothe survey, more than three quarters of consumers have stated that they would be willingto adapt to changes in the online payment process if it resulted in enhanced security.Alternative cash-based online payments that offer security and protection are growing inpopularity in response to evolving buyer preferences and are attracting new shopperdemographics.We present a payment method that protects both merchants and shoppers, addressing theconsumer concerns and barriers in a way that converts hesitant shoppers into confidentspenders with immediate results in new customer acquisition and increased order values.

EXECUTIVE SUMMARY

This study found thatfraud protection isthe most importantconsideration forconsumers whenselecting onlinepayment options.

1MasterCard Advisors SpendingPulse 2008 Holiday Wrap-up Reporthttp://www.marketwire.com/press-release/Mastercard-Advisrs-933516.html