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| E-Commerce is more secure than bricks-and-mortar stores |
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E-commerce is better than bricks-and-mortar stores in terms of customer payment behaviour. This is one of the conclusions made in the 2007 Pago Report entitled "Trends in consumer and payment behaviour in elected E-commerce industries in2006".
The report is based on some 30 million real-life purchase transactions. Payment behaviour is measured by the chargeback ratio, which is the percentage of reversed credit card transactions resulting from objections made by cardholders. These are usually an indication of an attempted fraud attack. The chargeback ratio for German online consumers fell to just 0.087% in 2006. This is an historic low for this measure which has been calculated since the first edition of the Pago Report in 2002. The Report is the only study globally which analyses consumer and payment behaviour and is based on real-life purchase transactions (as opposed to survey polls) in important e-commerce industry sectors. In contrast, the shoplifting ratio in bricks-and-mortar stores was about 0.44% in the same period. This figure was published by the EHI (Euro Handelsinstitut) and HDE (Hauptverband des Deutschen Einzelhandels), two renowned retailing associations in Germany.
The highest non-payment risks arose from female online customers from the German postal code region 3 (Hannover) who made purchases of more than 500€, about the value of an average package holiday. In contrast the best payers were male citizens from the postal code region 5 (Cologne) making purchases of under 10€, about the price for buying and downloading a CD.
The chargeback ratio allows conclusions to be drawn about fraud risks in various consumer groups in e-commerce who pay by credit card for the goods or services purchased. The unwanted top positions are held by the Stuttgart region (postal code region 7) and by Hannover (region code 3) which both registered ratios of 0.136%.The lowest chargeback ratios in Germany were recorded in the Cologne area (postal code region 5) at just 0.036%, closely followed by Berlin and environs (postal code region 1) with 0.06%. Nearly four out of ten online transactions in these two regions were paid for by credit card (37.43% and 38.12% respectively) ranking 4th and 5th in Germany. Consumers from Berlin Central (postal code area 10) were also second in the rankings for the most active German online consumers in all online shops. The Gießen/Marburg/Westerwald/Taunus area (postal code area 35) came from 18th position last year to top the rankings for the most active online consumers, accounting for 2.54% of all transactions in Germany. Berlin (ranked 11th last year) and Northern Hamburg (2nd last year) followed up with 2.17% shares.
In terms of gender distribution, non-payment risks are higher for female consumers than for males. In the period analysed, from October 2005 to September 2006, the European chargeback ratio for women was 0.15% and a little over 0.13% for men.
The highest chargeback ratios for German consumers (1.644%) were registered for transaction values of over 500€ - a price segment which is very typical for the travel industry. In contrast, for transaction values of under 10€, the chargeback ratio was a mere 0.177%, meaning that only one in 564 transactions was reversed. The Pago Report 2007 is available for 500 € (plus VAT) from the Pago Shop (www.pago.de/pagoshop/). |
