SOURCE: PaymentOne

May 14, 2007 16:30 ET

New Report: 80% of Online Consumers Would Buy More With Safer and More Convenient Pay Options

Billions Lost -- Local Phone and Broadband Bills Are Top Consumer Choices for Charging Small Digital Purchases

SAN JOSE, CA -- (MARKET WIRE) -- May 14, 2007 -- The results of the 2007 Annual Javelin Consumer Payment Poll indicate that the majority of online consumers would buy more if safer and more convenient payment options were offered. The Payment Poll responders would each spend between $100 to more than $1000 more per year if better payment options were available online, which, based on over 15 million active online buyers, translates to over $15 billion of lost revenue opportunity for digital merchants.

For the fourth straight year, among those who demonstrate a preference, a majority of consumers (80%) indicated a willingness to spend more online if given safe, convenient payment options beyond the credit card. More choice in payment options was the overwhelming driver of purchase behavior by a three to one margin over improved content and by a six to one margin over more affordable broadband access.

Commissioned by PaymentOne, the poll results were published by Javelin Strategy & Research in April 2007. The poll surveyed over 2,000 U.S. consumers regarding their online payment preferences around digital content and services. Music, software, online games, security services, content subscriptions, personals, video, and related premium services were among the top categories of purchase interest among the consumers polled.

80 Percent of Consumers Would Buy More in 2007, up from 74% in 2006 and 61% in 2003

Consumers are increasingly interested in using payment options that are safer and more convenient than credit cards. 80 percent of decisive consumers polled say they would "be more inclined to purchase online if given a safer, more convenient payment method than credit card." This is up from an average of 74% in 2006, and up significantly from 61 percent in 2003.

--  The numbers among younger consumers aged 18-34 were even higher, with
    over 84 percent indicating they would buy more
--  88% of fast growing Asian and Hispanic ethnic segments also showed
    much more likeliness to buy if given payment alternatives to credit card
--  Among middle and higher income segments of $50-$150K per year, 83%
    indicated they would buy more
"The major finding of the poll is that the availability of secure and convenient payment options beyond traditional credit and debit cards can drive significant incremental digital purchases, subscriptions and transactions. This is an outstanding opportunity for online merchants to grow their revenue through the introduction of payment alternatives," said Bruce Cundiff, Senior Analyst, Javelin Strategy & Research.

Majority of Consumers Cite Privacy and Identity Theft Concerns

Despite aggressive campaigns by merchants and card companies, fraud and identity theft concerns still loom large for a significant and growing number of consumers, and hinder online shopping growth: Two-thirds of those polled curtail their online shopping due to fears that their privacy or financial information (or both) will be abused or stolen.

The top concerns (33% respectively) are that information will be either intercepted during a transaction or accessed by unauthorized parties. In addition to credit card holders who had significant concerns about buying online, 22 percent of consumers stated that they were not able to transact online because they did not possess a credit card, which represents a large opportunity for merchants who can address this underserved segment.

"Digital media consumers of online games, music, video and more, including younger demos as well as those with substantial disposable income, continue to tell the industry that they want a safer, more convenient way to pay online," said Brad Singer, Executive Vice President of Products and Markets. "Deploying 'no credit card required' payment options represents a significant growth opportunity and competitive imperative for online merchants. Unlike other major product or service enhancements, expanding pay options does not require up front investment to drive incremental revenue growth. Many of our PhoneBill™ clients see increases of 15%-40% or more in new subscriber and transaction uptake."

Two-thirds of Consumers Have Abandoned Purchases at Point of Payment -- Billions in Lost Sales

The new study found that 66% of shoppers have abandoned purchases at the point of payment, representing millions of dollars of lost sales for merchants.

When asked how much more a consumer would spend if there were easier and safer alternatives to credit card, results showed an average increase in spending of $58-$170 per month, or an average of just over $1000 per year per consumer. For 15 million active online shoppers, this represents over $15 billion dollars of pent up demand and lost sales.

Small Digital Purchases More Likely With "No Credit Card Required" Options -- Consumers Prefer Local Phone Bill for Charging Smaller Purchases

Over half of all consumers indicted they are more likely to buy if "No Credit Card Required" options are available at the digital sites.

"No credit card required" payment options represent significant potential for content providers and network operators to attract more consumers. Consumers are increasingly interested in charging digital content and services to an existing trusted bill. In fact, when asked specifically which existing bill they would like to add small purchases to, consumers overwhelmingly pick their existing phone bills:

Over 60% of decisive consumers would prefer to add online charges to their existing local phone and/or broadband bills instead of credit card.

These existing bills are generally trusted, easy and convenient methods for consumers to utilize for making digital goods and services purchases. Since phone service is considered a necessity by most, it's one that the typical consumer will not allow to lapse. These existing billing instruments are especially attractive because they reduce the need for consumers to establish multiple, separate billing relationships, and do not require them to repetitively disclose sensitive information across multiple sites for small purchases. For merchants, existing bills now offer attractive economics and high retention and stickiness.

Implications for Digital Services and Network Operators

Because fraud concern and convenience are major issues with consumers, content providers must incorporate additional payment solutions and options into their overall growth strategies, which will in turn drive consumers to increase purchase levels. These companies should not abandon payment card acceptance, but rather augment with alternate existing bill options to reach and better serve additional new consumers not being reached today that either prefer not and/or cannot use traditional pay options.

Network operators in particular can also experience enhanced customer relationships through the use of their existing, well-established billing relationship with the consumer, thereby reducing churn and enhancing overall customer satisfaction. Forty percent of consumers specifically indicated they would be more likely or much more likely to remain a subscriber if they could use their bill for digital service purchases.

PaymentOne digital media clients alone have generated over $2.5 billion in incremental revenues by deploying "no credit card required" payment options, and have acquired tens of millions of new subscribers that were previously unreachable.

For a complete copy of the 2007 Annual Consumer Payment Poll, please visit

Media interested in speaking with Javelin Strategy & Research directly may do so by contacting Luke Albertalli at 925-225-9100 Ext 26, or via email at

Study Background and Methodology

Javelin Strategy & Research undertook a consumer poll in order to determine consumers' willingness to make purchases online; desire to make small value purchases online; and the attitudes that affect payment choices. The poll was conducted in March 2007, among 2,230 consumers (n = 2,230). The poll utilized a random-sample poll using opt-in remunerated participants and targeting respondents based on representative proportions of gender, age, and income, as compared to overall US online population. Although actual confidence intervals vary per unique question and response, this poll generally provides a margin of sampling error of +/-2 percentage points at the 95 percent confidence level.

About PaymentOne

PaymentOne Corporation is one of the world's fastest growing online Payment Services Providers (PSPs) and leading provider of PhoneBill™ to digital media providers. Founded in July 2000, PaymentOne has pioneered payment and marketing services that connect digital merchants and network operators and accelerate the adoption of online content and services by over 25%.

Based in Silicon Valley, PaymentOne has generated over $2.5 billion in new digital revenue over the last 36 months for its clients and partners. The company manages a network of over 1000 telecommunication/broadband providers, mobile operators and content partners including leading ISPs, BSPs, Telcos, broadband operators and media companies such as America Online, United Online, NetZero and Time Inc.

To help online merchants attract, convert and retain a wider audience, PaymentOne's integrated suite of revenue optimization services include a unique set of non-credit card payment alternatives, macro and micro payments, identity verification and fraud detection, traditional payment processing, global payments, and a co-marketing distribution network. The company's flagship PhoneBill service provides merchants with access to over 180 million consumers with mobile, broadband and land line accounts.

To learn more about PaymentOne, visit or call 800-747-4028.

About Javelin Strategy & Research

Javelin is the leading provider of independent, industry-specific, quantitative research and strategic direction for payments and financial services initiatives. Javelin conducts rigorous research and analysis to create successful strategies related to financial institutions, payments firms, technology vendors, merchants and billers, regulators and other policy-makers, associations, and consumer or business end-users. Javelin can be found on the Web at

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