Mobile Payment Industry News: 11/18/08

Tuesday, November 18, 2008

Microsoft Cashback Program Reaping Rewards

Cashback Program Grows MS Product Search From Puny to Small
By Jessica Mintz

Microsoft says ads on its Cashback search program have grown from 10 million to 13 million since the company began paying people to use the site. The software maker snagged 12.9 percent of product searches in the second quarter, while its overall share of U.S. search queries ran around 9 percent. However, both figures are still dwarfed by those of rivals Yahoo and Google.

Microsoft said Thursday that paying people to use its Internet search engine is attracting new consumers, although there is little evidence that those people are making a habit of it. Under Microsoft's Cashback program, launched in May, the company rewards shoppers with rebates from a few cents to US$20 or more on items they find using its search engine, Live Search.

When Microsoft began Cashback, the company said it would measure its success by the number of items advertised in the system, growth in its share of searches that lead to transactions online, and how happy merchants are with returns on their investment in Cashback ads.

Product Searches vs. Overall Searches

In an interview, Frederick Savoye, a senior director of product management for Live Search, said the number of items advertised on Cashback has grown to 13 million, from 10 million at launch. Companies like eBay (Nasdaq: EBAY) Latest News about eBay and Hewlett-Packard (NYSE: HPQ) Latest News about Hewlett-Packard say the ads they place on the Cashback site perform better than other paid search advertisements online.

A study conducted at Microsoft's request by research group comScore found that the software maker snagged 12.9 percent of product searches in the second quarter of the year. That's better than Microsoft's overall share of U.S. search queries, which was around 9 percent in that quarter, according to comScore, and that could mean Microsoft has found a viable way to draw new searchers.

However, overall search leader Google (Nasdaq: GOOG) Latest News about Google and No. 2 Yahoo (Nasdaq: YHOO) Latest News about Yahoo both still outpace Microsoft in commercial queries, nabbing 58.2 percent and 24.3 percent, respectively.

How Much to Spend?

Savoye said that 4.5 million people have been using Cashback every month since it started, and that the program has been effective in boosting Microsoft's overall search share.

Data from comScore, however, show Microsoft's search share rose less than a point to 9.2 percent in June, the month after Cashback launched. In July, Live Search's share dropped to 8.9 percent. "We still have work to do, but we're very, very focused here," Savoye said.

Microsoft declined to say how much money it plans to spend on the rebate program.

Gift Card Sales Down 6% This Holiday

NEW YORK (Reuters) – Sales of once-hot gift cards are expected to fall nearly 6 percent this holiday season as shoppers try to stretch their dollars by buying discounted merchandise, according to a survey released by the National Retail Federation on Tuesday.

Gift card sales are forecast to fall to $24.9 billion this holiday season, according to the trade group's annual gift card survey. Last year, gift card sales were expected to rise 6 percent to $26.3 billion, up from $24.8 billion in 2006 and $18.5 billion in 2005.

Not only did the survey find that fewer people plan to purchase gift cards, gift card shoppers are also expected to spend less on the cards -- $147.33 this year compared with $156.24 in 2007. "Since gift cards never go on sale, some price-conscious shoppers will be passing up gift cards in favor of holiday bargains," said NRF President and CEO Tracy Mullin in a statement.

The expected decline in gift card sales comes as the NRF has forecast that holiday sales will grow at their slowest rate since 2002. Shoppers are confronting slumping home values, volatile energy prices, rising unemployment and a credit crunch, which has curtailed their ability to spend.

With retailers already rolling out tremendous discounts to entice consumers to spend their limited dollars, shoppers may find they can buy presents this holiday season for less than what they were planning to spend on a gift card. But the decline in sales of gift cards could hurt retailers' results into January, when they count on shoppers returning to their stores to spend well beyond the face value of the cards. "Retailers may need to make minor adjustments to holiday plans as fewer people may be hitting the stores in January to redeem gift cards," Mullin said.

The survey polled 8,758 consumers between November 5 and 11, and was conducted for NRF by BIGresearch. It has a margin of error of plus or minus 1.0 percent.

Best and Worst Online Payment Options in the UK

PayPal Only Accepted in 17%, Google Checkout, only 5%

London, UK, Nov. 18, 2008 -- According to the ShopSpree, a directory of online shops that accept Visa Electron, Solo, PayPal, Maestro cards, the most accepted credit cards online are Visa Card, MasterCard and Maestro card.

Shopspree conducted this survey on more than 400 UK-based online shops to find out which credit or debit cards or forms of payment the shops accept. The research found out that 100% of the shops accept Visa card, 99% accept MasterCard and 76% accept Maestro card in online payments. Other interesting finding is the low acceptance rates of American Express, Visa Electron and JCB cards online, although these cards are popularly used by millions of consumers.

Although most of the online shops claim that they accept major cards online, only 45% of them accept American Express, 42% accept Visa Electron and 18% accept JCB cards in online payments. The low level of acceptance of these cards can be explained by the fact that these cards are given to people with lower credit rate like foreigners or students.

The survey also included the online acceptance rates of other digital payment options such as PayPal and Google Checkout and found out that only 17% of the shops accepted PayPal online and only 5% accepted Google Checkout. This is rather interesting as PayPal and Google Checkout have got growing numbers of users, but the online shops have not followed this trend.

Shopspree conducted this survey in order to categorize the online shops according the type of payment option accepted. For further information about the survey, please see best credit cards in the UK.

Source: Company press release.

Online Threats to Peak on Black Monday

While Black Friday and Cyber Monday are known for notoriously inexpensive prices on shopping items, did you know that these days are also notorious for identity theft?

On Black Friday and Cyber Monday, the Friday and Monday following Thanksgiving, consumers are dishing out the big bucks, so they may not notice a few extra charges on their bill. Therefore it is a perfect time of identity thieves to strike.

American consumers lost approximately $1.2 billion last year to due to identity theft and fraud, according to the Federal Trade Commission. Here's an advisory from Webroot talking about those online threats...

Webroot Threat Advisory: Online Threats to Increase This Holiday Season
Cyber Crime Projected to Spike on Cyber Monday

BOULDER, Colo. (Business Wire EON/PRWEB ) November 18, 2008 --

Webroot®, a leading provider of security solutions for the consumer, enterprise and SMB markets, is warning online shoppers of an increase in cyber threats this holiday season. The online holiday shopping season, and the peak of these online threats, is expected to hit its highest point on “Cyber Monday,” the day after the Thanksgiving weekend in the U.S., and continue through the holiday shopping season.

Shopping online can be a lot easier and save time, especially during the holidays, but people need to make sure they have the right protection in place so they don't enter the New Year as a victim of identity theft.

"Last year we saw an 87 percent increase in malicious URLs between October and December. These sites are typically used to trick shoppers into giving their credit or debit card numbers, or to download malware," said Peter Watkins, CEO of Webroot.

Though overall holiday sales this year are expected to decline, a recent report by eMarketer estimates that online holiday season sales will reach $32 billion in 2008, up 10 percent over 2007. The report states that in order to save money on holiday gifts, consumers will turn to the Internet to get gift ideas, find bargains and that shoppers will shift a larger share of their purchases from stores to the Internet to save gas.

Identity Theft Plagues Canadians as Online Shopping Grows

Sarah Schmidt, of the Canwest News Service, in an article published by the Calgary Herald reports that in a study by McMaster eBusiness Research Centre found that a majority of the 1.7 million cases of identity fraud in the past year involved unauthorized purchases made with credit cards.

Identity theft plagues Canadians as online shopping grows

Sarah Schmidt, Canwest News Service
Published: Monday, November 17, 2008

Victims of identity fraud spent more than $150 million of their own money and spent 20 million hours to resolve the fraud in the past year as part of a ballooning problem that struck almost 1.7 million Canadians, a survey has found.

Most victims (57 per cent) do not know how they wound up on a fraudster's hit list and it turns out old-fashioned shopping is riskier than online commerce; 25 per cent of cases were associated with business transactions conducted in person compared to 15 per cent linked to online transactions. Debit card skimming operations made up another 13 per cent of the cases.

The study says historically, 25 per cent of cases of identity fraud were committed by someone known to the victim, but the survey found this represented only seven per cent of all cases. continue reading

Canadians Spent $12.8B Online in 2007 - StatsCan

Online shopping jumped to $12.8B in 2007: StatsCan

More Canadians are shopping online, with sales in 2007 rising to $12.8 billion, according to a Statistics Canada report released yesterday.

Statistics Canada's last e-commerce study, conducted in 2005, found Canadians spent $7.9 billion online — meaning the value of online shopping rose 62 per cent in two years.

"More than 8.4 million Canadians aged 16 and over made an online purchase in 2007, up from nearly 6.9 million in 2005," the federal agency said in a release. "They accounted for 32 per cent of Canadians in this age group, compared with 28 per cent in 2005." Consumers in the 25 to 34 age bracket shopped online the most, with 51 per cent reporting placing an online order. Regionally, Alberta led the country with half its internet users aged 16 and up reporting shopping online in 2007.

The increase in part may be related to consumers' growing familiarity with online shopping, said Ed Strapagiel, a retail analyst with the Toronto-based Kubas Consultants who was not involved in the Statistics Canada study.

Many consumers browsing online

Statistics Canada also reported 43 per cent of Canadians used the internet to research potential purchases, including consumer electronics, housewares, furniture, clothing, jewelry and accessories. Of the shoppers who looked online, 64 per cent said they later went to a traditional bricks-and-mortar store to purchase the product.

Editor's Note: Look for those numbers to change drastically, maybe even reverse in next years Stats - I'm thinking instead of 43/64 it'll be 64/43. (See Paradigm Shift Post)

Overall, more than 8.4 million Canadians aged 16 and over purchased something online in 2007, up from nearly 6.9 million in 2005. The top 25 per cent of Canadian shoppers online spent an average of $5,000 in 2007, about 78 per cent of the total dollar value. The most common types of online orders were:
travel services
books and magazines
entertainment products such as concert tickets, clothing, jewelry and accessories
Most online shoppers, 82 per cent, paid directly online using a credit card or debit card. However, 77 per cent of those who did pay online still expressed concern about using their credit card over the Internet.

(Editor's Note: Want a secure transaction? Swipe your own card data in the privacy of your own home with HomeATM's wedgie)

Strapagiel said the uncertain economy may prompt consumers to research online, seeking information on both products and prices. He also said e-commerce might make advances this holiday season if retailers put products on sale exclusively online.

"Much of the merchandise that is going to be in stores this Christmas has already been bought; the truck's already arrived at the warehouse," he said. "But it was bought in a climate of [optimism] and in October that reversed very sharply. I think many retailers might be thinking in terms of let's get rid of what we have and not get stuck with the inventory. So there might be, for people who shop around there, might be some good deals to be had."

Canada a testing ground for U.S. retailers

Similarly Jim Okamura, a U.S.-based analyst with J.C. Williams Group, forecasts online shopping to continue to grow in the coming months, despite the economic slowdown. "We're still expecting the online channel to be one of the few bright spots within retail," he said. "The greater effort by retailers, both Canadian and U.S., to target those Canadian consumers are in our estimation going to work well … I think clearly shoppers are going to be using the web in general for both research and transacting because they're obviously going to be very value-conscious."

He also noted many U.S. retailers use the Canadian market as a strategic e-commerce testing ground before moving on to the European and Asian markets.

"It is in a sense disproportionate, the amount of focus being placed on Canadian e-commerce market entries, because it's more than just the volume of business that the Canadian has to offer, it has much more strategic importance in a broader international strategy," he said.

More Shoppers Moving Online - eMarketer

NOVEMBER 18, 2008

Online Buyers Active but Practical

Apparel and books will likely do fine this holiday. Jewelry, not so much.

More than three-quarters of US online adults made a purchase over the Web in the previous six months, according to a November 2008 study by Nielsen Online.

Respondents conducted a wide range of purchases and financial transactions.

Nearly four out of 10 online buyers had made a travel purchase during the past six months, and more than one-third had managed their credit card or banking accounts online. Top product purchase categories included apparel and books.

“The challenge for retailers is no longer how to lure shoppers online, but how to differentiate their brand among all others,” said Nachi Lolla, research director at Nielsen Online, in a statement.

“Heading into this competitive holiday shopping season, selection, price and customer service are the key areas retailers can shine.”

That behavior is notable in light of a survey of online buyers surveyed in April 2008 by Piper Jaffray. At the time, respondents said they expected to reduce their purchases across all retail product categories, especially for nonessential goods such as jewelry, watches and event tickets.

Graphic 2: Planned Change in the Amount of Retail Products Purchased by Category according to US Online Buyers, 2008 (% of respondents)

“As the pool of new online buyers begins to dry up, Web retailers will focus on strategies that help them retain customers, such as improving customer service, offering personalized product recommendations and incorporating user ratings and reviews,” said Jeffrey Grau, senior analyst at eMarketer.

“E-mail will continue to be an important way for Web retailers to stay in touch with customers.”