Sunday, January 11, 2009

Online Retailers Familiarizing Themselves with Foreign Markets

According to CyberSource many U.S. online retailers are "overseaing" ways to increase volume from international markets...

With sales in the U.S. slowing for many retailers, many of them are accepting orders from customers in emerging foreign markets including India and China, CyberSource Corp. says in a new study.

One way many retailers are getting more revenue is through international online orders, says Doug Schwegman, director of market and consumer intelligence for CyberSource, a provider of online payments processing and risk management technology and services. The study is based on a survey of 400 online retailers conducted for CyberSource by Mindware Research between Oct. 21 and Nov. 11, 2008. The 400 respondents account for a total of more than $60 billion in 2008 online revenue; 41% of them have annual revenue of $10 million or more, 29% have annual revenue of $25 million or more.

The study found, for example, that about half or more of merchants accept orders from 15 countries outside of the U.S. and Canada. On average, each merchant accepts orders from nine foreign countries.

Most surprising, Schwegman says, is that nearly half, or 49%, of merchants accept orders from India, and that 52% accept orders from China, two markets that may present challenges in shipping and payments. Most payment transactions in these and other foreign markets, however, are handled with common major credit cards including Visa, MasterCard and American Express, he adds.

Also surprising, however, is that few of the surveyed merchants who accept orders from overseas use payment options popular among consumers based in foreign markets. For example, in Germany, where 73% of the surveyed merchants accept orders, only 12% of them accept payments through the bank transfer methods preferred by many local consumers even though CyberSource and other payment services companies can enable U.S. merchants to accept such payments, Schwegman says.

Following are the 15 countries included in the study and the percentage of U.S. merchants that accept orders in each:
  1. U.K., 87%
  2. Germany, 73%
  3. France, 68%
  4. Australia, 68%
  5. Japan, 68%
  6. Spain, 66%
  7. Mexico, 66%
  8. Italy, 65%
  9. Brazil, 55%
  10. Hong Kong, 55%
  11. Singapore, 53%
  12. South Korea, 53%
  13. China, 52%
  14. Taiwan, 50%
  15. India, 49%

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ChipPin In

Stanley Opara writes for the Nigerian Punch about his country's transition from magstripe to Chip and PIN. Interswitch is that county's premier transaction switching platform and it won't be long before the United States stands alone as the only country on the globe yet to commit to EMV

Nigerian financial market and the chips/PIN revolution
By Stanley Opara
Published: Sunday, 11 Jan 2009

The e-payment industry remains a faction of the techno-driven set-ups, and the impact of this marriage between technology and finance has recorded huge successes as inferred from current statistics and industry analysis.

The truth, therefore, is that e-payment machinery, especially the card technology, is presently enjoying popular patronage, even as its applications in the day to day business activities rest on geometric cruise.

With the penetration deepening by the day, carrying abreast huge transactions, the issue of security and reliability has indeed become an industry subject-matter, with operators, regulators and users really concerned about the way forward.

The move by the Central Bank of Nigeria in this regard, could be described as prompt, and the compelling directive to players to convert technology from the traditional magnetic stripe to chip and PIN/smart card platform, a welcome development.

However, saying the country‘s card payment industry has come a long way, is stating the obvious. Nigeria was among the very first countries that adopted smartcard payment platform in the 90s with the ValuCard and SmartPAY schemes.  These e-purse smart cards could not generate the expected mass adoption due to some technical and strategic challenges. Hence, it was rested in the early 90s. In its place, Nigerian banks decided to adopt a cheaper but fraud-prone magnetic stripe cards.

The success of the initiative, powered by InterSwitch, the country‘s premier transaction switching platform, helped lay a foundation for the e-payment industry in the country and the West African region as a whole.

Today, as a result of this initiative, Nigerian banks have issued over 25 million cards. These cards are being used to process payment transactions on over 11,000 point of sale terminals, 7,000 ATMs and 200 web locations, 50,000 mobile devices...
But in its efforts to follow global best practice and secure global acceptance for cards of Nigeria origin, the CBN has mandated all the banks to convert their payment cards to a smartcard platform by the end of the second quarter of 2009. The CBN shifted the initial September 2008 deadline in order to permit the banks to prepare thoroughly for the expected cutover.

Since major payment card schemes in Europe, Middle East, South America and Africa have been converted to the secured smartcard platform, CBN‘s position is therefore in line with this global trend.

Experts have maintained that until the introduction of smart card payment system, all face-to-face credit or debit card transactions used a magnetic stripe or mechanical imprint to read and record account data, and a signature for verification, and as worries over the level of fraud associated with magnetic stripe cards heightened in the 1980‘s, the introduction of extra security measures including on-card photographs and holograms failed to solve the problem.

In the 1990s, card fraud increased. As a result, the payments industry commenced a quest for more secure and authentic replacement for the magnetic stripe.

This search inadvertently led to the mass deployment of the smart cards also knows as chip and PIN cards. Specifically, the French developed chip technology, which is also known as smart card technology, and had over the years recorded advancements in processor and circuit technology, following the chip to grow in complexity and size with many now holding 100 times the information stored on a magnetic stripe. 
continue reading at "The Punch"

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