Shopping sites must incorporate multiple payment mechanisms to attract shoppers, an IOAI survey finds out.

One of the biggest promises of payment mechanisms whilst online shopping is that it can accommodate a plethora of choices. Gone are the days where payment online was considered unsecured, developments in technology such as encrypted payment gateways have led to growing confidence among consumers about using credit cards online.

This growing confidence is reflected in an online survey conducted by the Internet and Online Association of India (IOAI) and Cross-Tab in March-April 2005 of Internet users and their shopping habits. The survey found that 62% of the respondents used credit cards to make online payments.

Mode of payment used online

Base: 1493

Nearly 58% preferred cash on delivery, while 28% used cheques, an equal number used direct debit from their banking account and 23% used debit cards.

There is a growing segment of affluent and educated users for whom using credit cards and other online payment methods such as direct debit and debit cards is second nature. There is an 'assurance' from banks and service providers such as 'Visa' and 'Mastercard' that online consumer will be protected and must be propagated better. A case for pre denominated and paid cards could also facilitate e-commerce.

The survey found that credit cards were most popular with the 26-35 age group (49% of respondents), followed by the 18-25 segment (21%) and the 36-45 bracket (18%). Another popular online payment method was direct debit from a banking account. Here again, it was most popular in the 26-35 age group, with 57% opting for it. It also seemed to be more popular among male shoppers (90%) compared to females (10%).

Of course, there will always be a large proportion of shoppers who prefer to use offline methods like COD and cheques. E-commerce sites will do well to offer a variety of payment methods to cater to the individual choices of a wide range of customers.