Presented by PayU

Online payments may be safer than offline

Online shopping in South Africa is expanding in terms of offerings such as event tickets, travel tickets, hotel reservations, and DVDs, books, music, and videos.

However, the latest Effective Measure E-Commerce Industry Report indicates that fewer consumers are transacting online than in the previous year.

In the 2017 survey, 46% of respondents have purchased something over the internet, compared to 56% of respondents in 2016. This year’s percentage still paints a positive picture of the local eCommerce landscape, which is expected to grow to over R53 billion by 2018.

But the statistics reflect one truth: most customers still prefer a trip to a brick-and-mortar store to get their spending on.

This then begs the question, what is preventing the remaining 54% of shoppers from using their credit card on an eCommerce website?

The Effective Measure report has the answer to this: there is a growing mistrust on the part of consumers in brands and their payment methods.

Given the frequency of data breaches, it should come as no surprise that consumers see online payments as a primary concern.

While there is a case to be made for the safety of offline payments (consumer’s credit card data is not saved anywhere), the tables have turned in recent years.

Criminals have figured out new techniques to access sensitive data at physical locations, such as using skimming devices that capture credit card information when a card is swiped.

Recently, major international retailers, Target, Neiman Marcus and Home Depot fell victim to data breaches.

It was reported that online customers were not affected. This has led to many security experts concluding that entering one’s credit card information at a card terminal at a brick-and-mortar store is risky.

When a credit card transaction takes place at a physical store, the retailer saves the card’s data on a computer which is connected to the payment terminal.

The customer’s credit card details are transferred to the merchant’s bank and the customer’s issuing bank for clearance.

If the details are validated, authorisation is sent back to the payment terminal.

These systems inherently run on outdated software and, with this much information floating back and forth, there will be a risk of the processing chain being hacked.

The weakness of traditional card payment systems is that the technology, developed in the 70s, is not updated very often.

Online payment systems, however, were invented in the digital era, and are thus far more cutting-edge as far as security is concerned.

What to look for in an online payment gateway

If you own an eCommerce website, or if any section of your website requires consumers to provide their credit card details, you need to invest in an online payment solution in South Africa that offers advanced levels of protection.

Most online payment gateways come with the following safety features: tokenisation, SLL, PCI, and 3D Secure.

  1. Tokenisation – a series of randomly generated numbers that substitute a customer’s primary account number (PAN), so that this information can safely pass through the internet.
  2. Secure Socket Layer (SLL) – technology that encrypts the exchange of data between the customer and the website.
  3. Payment Card Industry Data Security Standard (PCI) – a set of security standards designed to ensure that all companies accepting credit card payments host a secure environment.
  4. 3D Secure – an added layer of security that requires customers to enter a personal security code to authenticate a transaction.

As advancements in digital payments security continue to outpace those of traditional payment methods, eCommerce retailers are better equipped to help consumers overcome their online shopping fears.

By adopting a payment solution that is safe, reliable, and caters to payment preferences, merchants will likely see more consumers moving to the online shopping experience.

This article was published in partnership with PayU.

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Online payments may be safer than offline

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