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Trust: The key to successful e-commerce


e-payments is high on the agenda of financial institutions, telcos and technology companies, but not necessarily for on-line businesses. If we are to believe the hype, standards such as 3D-set and TeM are about to change the very nature of the internet and solve the burning issue of trust that has been a barrier to the take up of e-commerce. This article considers this and suggests that there are some fundamental trust issues that are arguably more important to promoting e-commerce than e-payments alone.

When we talk about trust in e-commerce, what do we really mean ? And what practical roles can the banks take to ensure that e-commerce transactions and revenues increase? After all, with merchant transaction charges ranging from 3 to 6 per cent, banks also look to benefit from this attractive revenue stream.

There's been a lot of discussion surrounding e-payments and their role in enticing more people to buy valuable goods on-line more frequently. Although I don't necessarily believe that this is the sole purpose of e-payment solutions, e-payment initiatives will have a beneficial impact on reducing UK fraud losses. According to APACS some £190m on-line fraud occurred in the UK in 1999 which will have a knock-on effect on increased user confidence. However, with the consistently poorest on-line and off-line fraud record in Europe (Britain accounts for half of Europe's credit card fraud: APACS 2000), conflicting emerging standards, concerns over Bluetooth security, bickering amongst retailers and banks about the implementation of chip based POS, what can we realistically hope for in the short term?

Recent research from Zona Research reveals that poor web site design, lumbering infrastructure and confusing processes are underpinning the abandonment of half of all on-line transactions before completion. That's $25Bn per annum. No wonder that 28 per cent of all UK on-line shoppers attempt to minimise risk by seeking out well-known brand names when shopping online.

Public Key Infrastructures are for tomorrow, not for today
Trust, in terms of Public Key Infrastructures, 3D-Set and MeT has no relevance for mainstream customers and businesses today and is unlikely to do so for the foreseeable future except in localised trials because new technology uptake is invariably slow and changes in habits are difficult to modify.

However, there are steps towards resolving this. Visa, working with member banks globally including issuers in the UK, is trying to roll out it's new 3D-Set secure protocol payer authentication system in which purchasers authenticate themselves by verifying their identity. Security using a chip mechanism has also been built into the protocol. The question remains as to who will provide the chip card?

If the telcos have their way the chip will be in the mobile phone SIM but how will the banks react to this? If the banks are to win out, it will be in the smart card, but smart card roll out is protracted, user acceptance and understanding is incredibly low, so the interim solution would appear to be going the way of the carriers. It's certainly the way the carriers would like it to go, not least because mobile wallets are expected to contribute to 10per cent of carrier revenues in the future.

However, what is considered commercially best for the carriers isn't necessarily the best for the wider marketplace - particularly as the banking and technology sectors and telcos continue to face interoperability problems with conflicting standards and usability issues.

Trust policies
A more realistic short-term solution to promoting trust and increasing on-line commerce activity is required. This has nothing to do with PKI, smart cards, SET or SIM cards. It's about common sense, investment in building on-line channels into mainstream business processes and understanding the dynamics of the customer. This shifts the emphasis here onto the merchant, but with 23 per cent of Internet users unable to trust their ISP, there is clearly a role for all organisations in engendering Trust.

Every organisation in the trusted supply chain has to deliver on three fundamental Trust policies. The first is the security policy. This is the area most consider to be fundamental to promoting trust. Some organisations today fail to deliver on some simple aspects of their security policies.

Not all organisations offer secure payment transactions over the Internet. This should be mandatory. Card issuers have an essential role to play in ensuring that all transactions containing payment and personal information are made secure. Egg, for example, has introduced the electronic wallet for transactions through the egg affiliate merchants. Although this a small user group, mobile wallets which resemble physical wallets but are held on a secure web server, are expected to boost purchase conversion rates due to storage of on-line preferences and trusted confirmation of on-line identities. We're seeing a proliferation of server wallet systems and ASP micro-billing solutions, which will help to facilitate e-Commerce unless they become confusing and unwieldy for users.

Another example is National Australia Group (NAG) who has introduced a secure payment service, which is referenced from its member merchants. This is a highly secure offering, but in the wider scheme of a large merchant site, payment acquisition is only a small component of trust. The challenge is for the merchant to capitalise on the relationship with NAG to highlight the trusted nature of the relationship long before the customer has engaged in the purchase cycle. Banks, card issuers and acquirers can and should do much more to integrate the trusted nature of the financial institution into mainstream on-line business and infrastructure.

At a procedural level, all organisations should provide clear and unambiguous statements about message encryption and how it safeguards the customer. Failure to do so raises immediate barriers to purchase, which can and should be easily overcome by simple and fundamental user centric design.

The Trust Circle
The second policy is the Customer Experience Policy. Customers experience dissatisfaction for many reasons, but the major contributable factors are usually under the control of the merchant and the other players in the trust chain. For example, recent research from Zona* showed small increases in page response times leading to significant increases in user dissatisfaction and abandonment. The $25Bn lost last year was because of poor web site design and failure to deliver service qualities to meet increasing customer expectations.

In the real world, customers wouldn't buy goods if they couldn't freely walk around the store or couldn't find what they were looking for. This happens on-line all too often. Confusing membership schemes, poorly designed navigation, missing links and cluttered page layouts can lead to consumer walk away.

Generally, the average user's on-line experience is extremely frustrating - exacerbated for many that repeatedly have trouble connecting to the Internet. Spare some thought for those users who purchase cable and adsl for faster data rates only to find that in many instances, page accessing is still slow.

So what can an on-line business do? The answer is many things. Optimise page downloads, use edge-casting caching mechanisms, ensure that 'end to end' processing is fast for a starter. Use tools, which are widely available, to test web site performance.

The protracted purchase process is another area for concern. I don't have problems with lengthy purchase processes for expensive items such as airline tickets, but I take exception to repeatedly being unable to complete a transaction. Over the last few weeks I've tried four different airline ticket sites and failed to complete the transaction each time. These have been for a number of reasons including searches repeatedly failing to complete, hanging transactions and confusion over when and when-not to use the back button on the browser menu bar. Each time I resorted to phoning a travel agent to fulfil the transactions but I won't be hurrying back to any of the sites. Incidentally, in using the travel agents, I found the telephone channel to be faster, more informative and certainly and most importantly, more trustworthy.

The final policy area for consideration is the Procedural Policy. The easiest area to fix, procedural policies have the most impact on the user's perception of the trust supply chain. Many organisations still pay insufficient attention to privacy policies, provide unclear and unrealistic customer complaint and redress mechanisms, and fail to providing coherent goods returns guidelines. Banks or their agents have an important role to play in advising merchants with whom they have an on-line relationship about customer procedures and through provision of third party accreditation.

The solution: Engendering trust in the supply chain
Every participant in the supply chain has a part to play in engendering trust on-line, non-more so than the banks, card issuers and acquirers.

However, the onus is on the merchants or the organisations controlling the primary relationship with the customer to prove their capabilities to participate in trusted online transactions.

The challenge for all parties is to recognise that there's a problem that extends beyond consumers and business users alike having an inherent distrust of the Internet for providing financial and personal information. The reasons are many and result from inadequacies in the supply chain.

Providing Internet shopping guarantees for example with the egg card is a start. Providing secure payment acquisition mechanisms has been a definite step forward. Merchants must now develop trust by:

n defining and implementing clear and robust security policies,

n developing flexible on-line businesses that are customer centric and deliver user experiences that meet customer expectations.

n (where financial institutions can provide assistance) ensuring that policies and guidelines are designed, implemented and adhered to.

Terry Cullen
Chief Navigator




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