Online Shopping Decisions Impacted By Enhanced Security

A new U.S. consumer study from MasterCard International has revealed that enhanced security features are key motivators influencing future online purchasing on retailers' websites. Assurance that personal information would be kept private, a guarantee that consumers would not receive unwanted e-mails as a result of purchases and an extra layer of security for credit card transactions were among the most important factors influencing the degree to which consumers would make purchases online. More than 1,000 consumers participated in the study, "MasterCard Internet Consumer Segmentation Research," which was conducted during fourth quarter 2002.

Key findings
While motivators to future online purchasing vary considerably by consumer segments identified in the study, research findings indicate that online security is a broad-based issue that impacts all segments. For example, when polled about major factors influencing future online purchasing:

• Seventy-three percent of study participants agreed that enhanced security features would influence their decision to purchase online in the next three months.
• Seventy percent of respondents are concerned with security and fraud issues.
• Sixty-one percent of respondents are concerned that their credit card number will be intercepted by "hackers."

The research shows that the following security-enhancing features have high potential to alleviate security concerns and to increase Internet purchasing in the future:

• Privacy assurance
• No unwanted e-mails
• Extra layer of security for online purchases
• Security endorsement on site.

Additionally, the research demonstrates that as the length of time a person spends online increases, the "breadth and depth" of Internet usage increases as well. The least experienced group - "Technology Skeptics" - had an average online tenure of 3.8 years and an average of only four online activities performed regularly, while the most experienced group - "Confident Core Users" - averaged 5.9 years online and ten activities.

In addition, Technology Skeptics' activities were mainly communications-related, while Confident Core Users' activities encompassed a variety of areas including shopping, travel and information access.

These results suggest that as current users become more comfortable with the Internet, the breadth and depth of their activities will continue to grow. Likewise, as new users begin using the Internet, their activities will expand as their online tenure grows. This cycle will continue as new users evolve into more experienced users and the next generation of new users join the marketplace, resulting in a continuous expansion of Internet usage.

Five distinct consumer groups revealed
Segmentation information gathered through the study included attitudinal and behavioral dimensions, as well as credit card usage behavior. This led to the identification of five key consumer groups, which exhibit unique profiles in terms of behavior, attitudes and lifestyles.

• Confident Core Users - This group represented 22 percent of study participants. As experienced Internet users, Confident Core Users showed the greatest depth and breadth of web usage and online buying among all the segments, fully integrating the benefits and functionality of the Internet into their lives. About 18 percent of their overall credit card spending happens online vs. offline. Although they are shopping online the most, this group still has moderate concerns about Internet security.
• Cautious Shoppers - As with the first segment, this group also represented 22 percent of study participants. While Cautious Shoppers are similar to Confident Core Users in that they are Internet-savvy, they exhibit lower online spending and are less experienced with using the Internet for financial and credit card activities. This group differentiates themselves from the Confident Core Users and Mainstream Users in that they have a higher level of concern related to credit card fraud on the Internet.
• Mainstream Users - This group also represents 22 percent of research participants. Mainstream users are not as "deeply involved" as the prior two segments, and have similar security concerns as Cautious Shoppers. However, they still use the Internet for a variety of activities, centered on time-savings and entertainment activities and light online purchasing.
• Curious But Not Convinced - Representing 23 percent of participants, Curious But Not Convinced have low levels of Internet purchasing experience and lower usage of online products and services, but are just beginning to recognize some of the benefits of the Internet. They also have a high level of concern regarding Internet security.
• Technology Skeptics - The smallest of the groups, Technology Skeptics, represented 11 percent of participants. They are the least experienced Internet users with low utilization across all areas. They have the highest concerns about Internet security, privacy and technology in general. As a result, they are more comfortable with traditional shopping channels.

Methodology
Conducted by Hamill Associates, Inc. in Q4 of last year, the study, "MasterCard Internet Consumer Segmentation Research," was commissioned to examine Internet usage behavior focusing on online purchasing patterns and to understand the consumer mindset associated with personal commerce on the Internet. The study also measured awareness, penetration and consumer assessment of e-commerce tools. The study provides a more detailed understanding of Internet users beyond basic demographics and identifies unique consumer segments that exist in the market.

A total of 1,024 Internet surveys were completed among a nationally representative sample of banked adults with Internet access, with half of the participants being male and half female. Consumers were recruited and screened over the phone, and sent to the web to complete the survey. Participants were screened to meet the following criteria:

• 18-69 years old
• Own a general-purpose payment card
• Have an e-mail address that is utilized for personal e-mails
• Have been online in the past 30 days for personal use
• Household income of $15,000 or more.

For more information, visit the website www.mastercardinternational.com.