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Shari McConahay

Alternatives to Credit Cards on the Rise

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Retail Decisions, one of the world leaders in fraud prevention and credit card processing is adding new payment options to traditional credit card payments to their services. With an eye on credit card security and fraud prevention, other methods are going to be utilized and credit card usage will soon be on the decline. The article from Internet Retailer quotes: "Credit cardís share of online payments is expected to decline from 60% today to 44% by 2012 and already 41% of online consumers prefer alternative payment options over credit cards*. Fraud-conscious consumers are increasingly reluctant to provide credit card details and alternative payment options such as eWallets are seen as more secure."

Coming from the stand point of an online retailer, I really hope this is a wake up call to the credit card companies. There are many low cost ways to prevent credit card fraud that the credit card companies and issuing banks fail to take because they are never the ones who pay any penalties for fraud, they in fact, often make money on it. Ultimately the merchants pay when a fraudulent credit card is used to pay for merchandise on their site. Not only does the merchant lose the money from the sale, they lose the merchandise, the shipping costs and they are hit with a charge back fee of up to $40 when the cardholder reports the charges as fraudulent. Years ago Master Card was implementing a pin # to be issued to all card holders for online purchases since a signature is not required, that never went through. Citibank used to put the card holder's picture on the front of the card - a very simple way for brick and mortar merchants to see if the card holder is the person there signing for it. Those two ideas alone would drastically reduce the amount of credit card fraud. I really hope that the issue is resolved soon, ultimately we all pay the price when merchants have to increase their mark ups to account for these problems that have become a cost of doing business.

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