Risk of non-payment in online retailing lower for women than for men

COLOGNE, 13 March 2009 - In European online retailing, risks of non-payment are much lower for women than for men.  This is indicated by a lower chargeback ratio, which describes the share of credit card transactions which had to be charged back after the cardholder rejected the transaction. At roughly 0.10%, female consumers' non-payment ratio for online purchases paid for by credit card is only half that of male customers (0.19%). One year before  the opposite was true. This is one of the results of the Pago Retail Report 2008, which was recently published by  Deutsche Card Services, a subsidiary of Deutsche Bank. 

Chargeback ratio remains low in the retail sector
The Pago Retail Report 2008 underlined the encouraging fact that the overall chargeback ratio in European online  purchasing remained very low, at 0.34%. A look at the reasons for chargebacks reveals an important difference  between retailing and overall e-commerce (which is analysed in detail in the Pago Report 2008). In retailing, one  out of five chargebacks (just below 20%) is the result of "unclear transactions', in contrast to only 8.57% in  overall e-commerce. This reason of rejection might be avoided easily, for example by executing the order in a  timely fashion and clearly stating the recipient of the payment - the online merchant - in the debit statement.  This is a point where online merchants themselves have to do better - and in addition, they should educate their customers better about how they can avoid data entry mistakes.

Use of 3-D Secure reduces chargeback ratio 
By using 3-D Secure European retailers can reduce their credit-card-related chargeback ratio, i.e. the risk of  non-payment, to 0.24%. In other words: Only one out of 400 purchases paid for by credit card or Maestro fails. The  3-D Secure technology allows online merchants to protect themselves against misuse of credit cards and against  wrongly entered credit card numbers. The procedure consists of the authentication stage and the actual credit card  transaction. During the authentication stage the identity of the cardholder is verified by the card issuer's  checking the cardholder's password, so potential fraudsters will fail to identify themselves correctly. Even  though 3-D Secure is not yet offered by all banks, using it makes sense for merchants. If the procedure is used,  it is no longer possible to insist on chargebacks by arguing that the cardholder has not initiated the  transaction. And merchants will not be exposed to this risk either if they want to use 3-D Secure, but an  authentication is impossible because the cardholder or the cardholder's bank do not support the system. It should  be noted that 3-D Secure is obligatory for Maestro transactions, but voluntary for credit cards.

Lower chargeback ratio for consumers from outside Europe than in the year before
The favourable overall development in chargeback ratios is particularly evident among consumers who, in the Pago  Retail Report 2008 categorisation, come from the "rest of Europe". This term covers European customers who are not  living in the e-commerce strongholds Germany and UK. In the rest of Europe the comparatively high chargeback ratio  registered in the year before (1.03%) fell to a favourable 0.19%. The chargeback ratio is lowest for German  customers, at only 0.08%.

Pago Retail Report 2008 an expansion of the Pago Report 2008
The Pago Retail Report 2008 differentiates between customers from Germany, the UK, the rest of Europe and regions  outside Europe. In contrast, all merchants are domiciled in European countries - a logical restriction in that  this is Deutsche Card Services' licensing area. Evaluations of new payment methods such as giropay and Maestro are  particularly important at the European level, and the Pago Retail Report 2008 gives them for the first time ever.  The analysis only covers online merchants which offer goods, i.e. whose business is similar to traditional  mail-order retailing. Thus the Pago Retail Report 2008 supplements the Pago Report 2008, which deals with  e-commerce as a whole.

The Pago Retail Report 2008, which is entitled "Purchasing and Payment Behaviour in Online Retail", gives numerous  evaluations of European trends in purchasing and payment behaviour and non-payment risks and explains developments  in retailing, one of the most important e-commerce sectors. This covers online shops which offer goods, i.e.  pursue a similar business model as traditional mail-order business - a sector which should have blossomed in the  Christmas shopping spree lately. The database consists of about seven and a half million retail transactions  settled via the Pago platform between October 2006 and September 2007.

The Pago Retail Report 2008 is available at a price of EUR 250 (excl. VAT). For more information please see  www.ecommerce-report.de.

Please note: Media professionals can obtain the Pago Retail Report 2008 for free on request. Please get in touch  with the contact set out below if you want to use the report for your work.

For more information please contact: 

Deutsche Card Services GmbH
Tobias F. Hauptvogel
Head of Marketing & Communications
Kaltenbornweg 1-3
50679 Cologne
Phone: +49 221 99577-728
Telefax: +49 221 99577-8728
tobias.hauptvogel(at)db.com
pr.deucs(at)db.com
www.deutsche-card-services.com