The risk of fraud involved in doing e-commerce is overestimated to a large extent. This is the conclusion drawn by the Pago 2006 report, which on the basis of 50 million real purchases has analysed the »Trends of the year 2005 in the purchase and payment behaviour in the relevant e-commerce branches«. The figure on which this conclusion is based represents the charge back rate which describes the share of credit card transactions which are re-credited to the card holder´s account after his objection to the debit – most of the time due to attempted fraud.
For online transactions this rate amounted to as little as 0.42 percent in 2005, whereas the comparable shoplifting rate was 0.48 percent in 2004. These figures had been calculated by the Euro Trade Institute (EHI) and the General association of German retailers (HDE). »The e-commerce fraud risk development is very positive«, says Dr. Markus Weber, managing director of Pago, »and the average charge back rate for credit card transactions on a European scale has even fallen from 1.26 to as low as 0.48 percent, and represents the lowest rate ever since people pay by credit card over the Internet.«
The biggest risk for credit card transactions concerns payments in online shops. Taking a look at different shopping baskets reveals more about the losses encurred by online trade businesses: The highest charge back rate of 0.82 percent by German consumers can be found in the shopping basket segment with a value below ten Euros, which is a typical figure in the field of telecommunications. For shopping baskets amounting to more than ten Euros there is a charge back rate of between 0.01 and 0.12 percent, which means that there is only one case of fraud for each 1.000 to 10.000 purchases.
The complete Pago 2006 report can be obtained online at a cost of 500 Euros.