by: Brian Day
With U.S. online sales forecast to reach more than $320 billion by 2016, it’s clear Americans are becoming more comfortable shopping online with each passing year. The same appears to be true for consumers across the globe, with eMarketer predicting worldwide ecommerce sales to total $1.5 trillion this year.
Making these sales secure is a hot-button issue for many in the payments industry, and increasingly, the consumer. Online authentication methods, such as Verified by Visa and MasterCard SecureCode were introduced a number of years ago as an additional layer of security for online transactions. Created as fraud-prevention tools, these methods require online shoppers to securely verify their identity for safer ecommerce transactions.
Interestingly, a recent report found only 57 percent of online merchants are using consumer authentication technology on their websites. Of those retailers who do not employ a consumer authentication method, 20 percent listed fear of losing the sale as their number one reason for not requiring it. Thirteen percent were concerned about creating a negative shopping experience, and 10 percent simply wanted nothing to do with consumer authentication.
The Cardinal Commerce report, Use of Consumer Authentication in eCommerce: Annual Survey, 2014, concluded North American retailers, in particular, have fallen behind global merchants in requiring authentication. Fewer than half (43 percent) of North American merchants are enrolled in at least one consumer authentication program, while 60 percent of online merchants outside North America employ some sort of authentication method.
Education is a key component to increased merchant adoption of consumer authentication methods. The report offers evidence that the “fear factor” can be overcome by the “happiness factor” authentication-using merchants have expressed. Specifically, 81 percent of retailers polled expressed satisfaction with the authentication solutions they use. Additionally, 57 percent of merchants said using authentication had no effect on sales conversion, either positive or negative; and 21 percent indicated it had a positive effect on sales. Lastly, 59 percent of retailers worldwide said authentication resulted in fewer chargebacks; 65 percent said it had neither a positive nor negative impact on the user experience; and 13 percent indicated it improved the shopping experience.
