| October 19, 2000 Visa moves to jump-start online sales Drops liability charge: Decision addresses cardholder concerns over the security of Web shopping Robert Thompson Financial Post As part of a move to boost Canadian online retail sales, Visa Canada yesterday said it was dropping the liability charge cardholders face for unauthorized use of their cards. Chief competitor MasterCard International Inc. responded it is likely to follow suit. A Visa cardholder had previously been responsible for a $50 deductible if their card was used without their knowledge. Brenda Woods, Visa's vice-president of marketing, cited an ACNeilsen survey which said 67% of Canadians were still concerned about using their credit cards on the Web as one of the main factors behind removing the liability charge. "We think that coming from Visa, this will give consumers a sense of security," Ms. Woods said. There are more than 22 million Visa cardholders in Canada, Ms. Woods said, and more than 567,000 locations in the country that accept the cards. The company does more than US$1.6-trillion in sales worldwide through the cards, and Ms. Woods said fraud accounts for than $1-billion in losses. She added limiting the liability was only part of Visa's overall plan, which includes developing technology to make it more secure for consumer to use the Net. Canadian e-commerce has not met expectations, with only 10% of Canadian companies using the Internet to sell goods and services, according to a recent Statistics Canada report, and sales only amounted to 0.2% of their total revenue. "It's a little surprising, but there has been a perception that the Internet is not safe," said Jeremy Depow, an analyst with the Yankee Group in Canada. "But I think this is certainly going to increase the amount people who use their credit cards on the Net." Older, less Internet-savvy consumers have been hesitant to use the Net to purchase goods, he added. The Yankee Group expects Internet sales in Canada to account for $1.4-billion in 2000, though that number is likely conservative, Mr. Depow said. Visa's move was applauded by Canadian retailers, who said it may get reluctant Internet shoppers to try out the Web during the upcoming holiday season. "I think this is a symbolic move and will encourage people who are on the edge of trying [online shopping]," said Peter Cooper, president of Internet book retailer Indigo.ca. "I think Visa knows their losses from this will be minimal." The strength of the Visa brand is an important factor in consumer confidence, said Mike Abramsky, chief executive for BuyBuddy.com, a comparison shopping site. "I think Canadians are very interested in using the Web as a shopping tool and the Visa brand is very powerful in making them feel more comfortable," Mr. Abramsky said. Kathy Bennett, marketing manager for Sam The Record Man.com, said the change confirms the security of Canadian retail sites. "I think Visa is very confident the sites of their partners are secure," said Ms. Bennett. "I think this will make a big difference in getting new shoppers to try Internet shopping." Visa's chief competitor, MasterCard, rarely enforces its $50 liability clause, said Craig Penney, the company's general manager, and is looking into dropping it altogether. The company currently has a "virtual" card, which is essentially a number that can only be used for Internet buying. The issue is part of a review the company is currently undertaking, Mr. Penney said, though he added Internet fraud receives more attention than it deserves. "The incidence of online fraud is more perception than reality," he said. Competitor American Express does not have a liability clause for its customers, a company spokeswoman said. rthompson@nationalpost.com <mailto:rthompson@nationalpost.com> <<...>> |
