Consumers Now Trust Online Payment Providers

You may have to set up online banking kiosks or biometric payment systems in your showroom some time soon.

Consumers now trust online payment providers more than they trust traditional banks, according to a recent survey by Cisco’s Internet Business Solutions Group (IBSG).

The distrust has been exacerbated by the recent meltdown of financial institutions. Remember when people were afraid to conduct business online? Now, it’s just the opposite.

The survey suggests that the physical-store experience is increasingly falling short of consumer expectations:

• 50 percent say the checkout process takes too long
• 48 percent say items aren't in stock
• 22 percent say they don't always have applicable coupons or offers with them
• 20 percent say it is hard or time-consuming to keep track of receipts

As consumers' expectations rise, custom retailers will have to alter how they accept payment.

The survey says 87 percent of those who use alternate payment providers (such as PayPal and Obopay) indicate a strong interest in using mobile Short Message Service (SMS) or a similar method to initiate payments in physical stores.

This dramatic shift in consumer expectations presents a considerable market challenge for integrators with showrooms as the distrust of banks transfers to all brick-and-mortar locations. It is also an opportunity to perhaps beef up your online presence.

The Cisco IBSG survey results show that the brick-and-mortar experience must resemble the online channel to meet the shifting expectations of consumers.

Another study by The Pelorus Group estimates that payments made via emerging methods such as radio frequency identification (RFID), SMS, and biometrics are expected to grow to $400 billion by 2010.

In addition, 23 percent of all survey respondents express interest in using a mobile device to make contact-less payments in physical stores, and that number is only expected to grow.

"Consumers not only recognize the conveniences enabled by the Internet but now also require the totality of their shopping experiences to afford those same benefits," said Jim Greene, vice president and global head of financial services, Cisco IBSG.

Innovations like this will likely appear first in big-box retailers like Best Buy.