Internet payment firm WorldPay launched a guarantee against online fraud Monday in an attempt to persuade retailers to set up shop on the Web.
While fears about online fraud are still high on consumer's agendas, WorldPay claims fraudulent transactions account for a "tiny percentage" of the total Internet spend. Chargebacks -- where shoppers claim back money from e-tailers either as a result of fraud or bad service -- are used by Internet payment companies as a monitor of online fraud and represent just 0.004 percent of all payments processed by WorldPay.
WorldPay handles over 50 percent of all UK online transactions and is confident its decision to guarantee against fraud will benefit consumers and businesses alike. "Internet fraud is not as significant as people think it is," says a WorldPay spokeswoman. "If it was as big as people think it is we would be losing huge amounts of money and we would hardly launch a product that would lose us money."
For businesses the fear of chargebacks -- which traditionally they had to pay out for -- has been a big barrier to setting up online. According to WorldPay, chargebacks are as likely to be the result of poor service on the part of the e-tailer as they are to be fraud. Online chargebacks are also "slightly lower than for telephone or catalogue purchases", the spokeswoman says.
Not all e-tailers will be heartened by WorldPay's scheme. The firm does not intend to extend the offer to online gambling or adult content sites. "These have much higher levels of chargebacks," says the spokeswoman. "If a man visits 'bigboobs' and loses a lot of money he is far more likely to say he didn't make the transaction," she adds.
Online fraud continues to be the main worry for Internet shoppers. According to a survey from research firm BMRB, 66 percent of shoppers cite security fears as the main barrier to buying online. Analyst firm IDC estimates that US e-tailers alone could lose $200m (£122m) to fraud over the Christmas period. On the bright side though, BMRB finds that only 20 percent of online shoppers complained about poor service levels or fraud in the last 12 months.
Take me to the e-commerce special.
Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum.