Online Debit

There would be few among us who have not used a debit card to pay for a purchase from a favourite bricks-and-mortar retailer. Online debit payments are an entirely different story. Despite the continued growth of e commerce sales goods and/or services that are purchased online are typically paid for with a credit card. What does this mean to businesses looking to craft an online payments strategy? Does offering all payment types need to be a part of the strategy or will Visa and MasterCard acceptance suffice?

One of the reasons online debit has yet to really catch on is number of additional steps required to make a purchase. Once it has been selected as the payment type customers are then directed to their bank's web page where they have to sign in to their web-banking account. After logging in, customers need to select the account they want the payment to be made from. Once the payment amount has been confirmed customers are directed back to the merchant's website. One of the benefits of shopping online is the convenience factor, something online debit fails to deliver.

A second issue to consider is the security or piece of mind using a credit card to make online purchases provides shoppers. In addition to security features like Verified by Visa or MasterCard SecureCode, Visa and MasterCard have a robust dispute mechanism that provide their cardholders an added degree of protection should their online shopping experience not meet their expectations. The 'protection' of the credit card companies is missing when people choose to make online purchases with their debit card. It should also be noted that the hall mark of debit security, the four digit pin number, is also missing in with an online debit transaction.

When selling online a merchant needs to have their website integrated with a payment gateway in order to process credit card transactions. While there are a number of payment gateways available for a merchant to choose from the vast majority only offer credit card acceptance. The reasons for this are numerous but what it does speak to is the simple lack of demand from but consumers and merchants for alternative payment methods.

Something that is sure to have a significant impact in how online sales are processed will be the growth of Visa Debit. Currently, only one financial institution offers a Visa Debit card but that will soon change. The key advantage of using a Visa Debit card to make online purchases will be the fact it combines the issue of use and protection of a Visa card with the fact the purchase amount is withdrawn immediately from the cardholder's account.

Another fact worth considering is the cost associated with accepting online debit. Unlike in a retail environment where a debit transaction only costs on average $0.10 in an ecommerce environment the cost becomes a minimum of $1.00. This cost difference means nothing to consumers but still warrants consideration.

The story of online debit is the story of a product that works great in a retail environment but works just okay in an e commerce environment. As a merchant looking to sell via their company website it is an option that is nice to have but it certainly is not a need to have. For those merchants who are passionate about wanting to offering all payment types the challenge then becomes finding a gateway provider who offers it. For those looking to make purchases online Visa and MasterCard offer a better online experience with the added benefit of the security using a credit card brings.