Press Release

Online Shopping Increases as Price, Convenience and Security Become Paramount – MasterCard Survey

Survey reveals 58% of people using the Internet, shop online; 89% of people are satisfied with their overall online shopping experience

Johannesburg, 18 April 2012: According to the latest MasterCard Worldwide Online Shopping Survey, online shopping has increased significantly in South Africa and continues to show potential for growth, with price, convenience and security key factors to consider making a purchasing decision.

The survey revealed that the number of South Africans shopping online has steadily increased over the past two years, with 58% of respondents in a survey of active Internet users saying that they use the Internet for shopping. This is an increase from the 53% that said that they shop online in 2010, and the 44% that gave the same answer in 2009.

When choosing an online retailer from where to make their purchases, the majority of respondents cited lower prices (91%), payment convenience (90%) and secure payment facilities (90%) as their main motivators for doing so. They also said that websites should have a good reputation, be user-friendly, and that the online retail provider of choice should offer low or no extra charges for delivery.

“The numbers speak for themselves,” says Anna Jones, General Manager, South Africa, MasterCard Worldwide. “The latest MasterCard survey found that among those shopping online, a majority 89% of respondents are satisfied with their overall online shopping experience, with 73% likely to make a purchase in the next six months. While these responses have remained static since last year, they show that the level of satisfaction has remained consistent as the number of online shoppers has grown.”

The survey, which serves as a benchmark that measures consumers’ propensity to shop online, was conducted across 25 markets between 5 December 2011 and 6 January 2012. The South African report surveyed banked consumers who access the Internet at least once a week. They were asked questions about their online shopping habits. The survey and its accompanying reports do not represent MasterCard’s financial performance.

“The findings back up our research into the way online shopping evolves,” says Arthur Goldstuck, MD of World Wide Worx, which conducts annual studies on the size of the online retail market. “We have shown that, once people are experienced Internet users and go online regularly, their propensity to shop online increases dramatically. The key is to convert that propensity into shopping behaviour, and this survey pinpoints where and why that conversion is happening.”

South Africans who shop online do so because they find it convenient and easy, and that the wide range of goods available is appealing. They also look to online portals to research purchases they are planning on making with 78% of online shoppers saying that they look at online reviews before they purchase, while 73% said that they investigate online reviews of the retailer themselves before making a purchase. In a show of confidence for the online retail environment, 74% of respondents said that they would return to an online retailer from which they had already made a purchase.

Among the most popular purchases made online were products and services related to coupon/deal sites, online gaming, applications, music downloads and tickets to arts or music events.

Ninety-five percent of respondents mentioned that they had visited deal or coupon websites, which have made a noisy entrance onto the local online environment since the last survey was conducted. One quarter of visits to these sites ended in the purchase of a deal.

“This shows how the online world can work in tandem with the bricks-and-mortar environment, with online spend driving spend with conventional outlets,” says Goldstuck. “Many people now conduct product research online before making a purchase in-store. Retailers that avoid the virtual option for fear of cannibalisation of customers are in fact missing out on a powerful driver of traffic through their physical stores.”

The research also revealed increases in the number of people who are shopping online (versus offline) for travel purposes: 87% of respondents (up 10% from 2010) have made purchases from airlines and 71% (up 9% from 2010) have made hotel bookings online in the last three months.

On the opposite side of the coin, South Africans revealed that they prefer not to shop online for their groceries, with only 9% making this their first choice to avoid the chore of grocery shopping. This is a decrease to the previous survey’s result of 27%, showing a18% decline.

“We’ve also found that online grocery shopping has declined , mainly because people want to choose fresh products personally, delivery schedules are too inflexible and too many mistakes are made by in-store stock pickers,” says Goldstuck.

When it comes to paying for online purchases, the majority of respondents (84%) use payment cards or EFTs or a combination thereof. Encouragingly, security is less of an issue than it has been in the past years with 38% of respondents saying that they are not convinced that the medium is safe. This is down from 47% in the last survey, which itself was a drop from the 59% of the 2009 results.

Introducing MasterCard Mobile

To provide even greater access, convenience and security for online shoppers, MasterCard, in collaboration with local mobile-centric payments and financial services company - Oltio – have introduced MasterCard Mobile to the South African market.

MasterCard Mobile is a payment platform that will enable MasterCard and Maestro cardholders to use their PIN-based debit, cheque or credit cards issued by Absa, Nedbank and Standard Bank, and a mobile phone on the MTN or Vodacom network to pay for online purchases. . A key feature of MasterCard Mobile is that it enables these Maestro cardholders to make secure online purchases for the first time, which in the past has not been the case. In addition, the relevant MasterCard debit and credit cardholders will also be able to use the payment platform.

To make an online payment using MasterCard Mobile, a cardholder can select to use the MasterCard Mobile payment option on participating e-commerce sites – similarly to how they would select to pay by credit card, debit card or EFT. For first-time users of MasterCard Mobile, the –user will be securely prompted to register their payment card of choice where they will enter their PIN-based MasterCard debit or credit card or Maestro debit card number, the expiry date of the card and CVC number. They will also be required to enter their mobile phone number. Once this is done, the cardholder’s mobile phone number is used to initiate subsequent payments. Authorisation of payments is done by entering the cardholder’s PIN on their mobile phone

“While providing greater convenience, MasterCard cardholders have peace of mind knowing that they no longer need to share their card details online. Instead, the information remains secure with MasterCard Mobile which verifies and concludes payments on the cardholder’s behalf. And importantly, the MasterCard Mobile solution does not levy any additional fees to the cardholder and, unlike EFTs, the payment is made instantly,” Jones concludes.

“MasterCard Mobile is currently being piloted and we are looking to roll-out the platform to most e-commerce sites in South Africa in the near future. In addition, MasterCard Mobile is currently used by MTN for air time purchases,” says Terry Timson, CEO, Oltio.

Although the functionality is currently not available in South Africa, MasterCard Mobile can also enable person-to-person payments and be used at traditional/brick-and-mortar merchants that are MasterCard Mobile-enabled.

About MasterCard

MasterCard (NYSE: MA), www.mastercard.com, is a global payments and technology company. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews, join the conversation on The Heart of Commerce Blog and subscribe for the latest news.

About Oltio

Oltio (Pty) Ltd – formerly MTN Mobile Money South Africa (Pty) Ltd – is a wholly-owned subsidiary of MTN Mobile Money Holdings (Pty) Ltd, a joint venture company formed in 2004 between the MTN Group (50%) and the Standard Bank Group (50%). The Standard Bank Group is the largest African bank by assets and earnings and MTN Group is the largest African Mobile Network Operator (MNO).

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Contacts:

Media Relations:  Nicky James, nickyj@tribecapr.co.za  +27 11 208 5500