Reaching Big Spenders - The Online Banking Oppurtunity

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Reaching Big Spenders:

The Online Banking Opportunity

A JC Williams Group Report

MODASolutions2207 Concord Pike, #510

Wilmington, DE 19803-2908866-365-6632

www.MODASolutions.comwww.eBillme.com

September 2007
http://www.modasolutions.com/http://www.ebillme.com/http://www.ebillme.com/http://www.modasolutions.com/


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Table of Contents

1. Introduction................................................................................... 3Objectives and methodology .............................................................................................. 3

2. Key Findings................................................................................. 4

Intersection of online bankers and online shoppers........................................................... 4Online shoppers and bankers spend more ........................................................................ 4

3. Profile of the Online Banker ........................................................ 5Comfort and experience ..................................................................................................... 5

4. Attitudes towards Online Payment ............................................. 6Safety and security ............................................................................................................. 6Choice................................................................................................................................. 6

5. Profile of the Online Shopper...................................................... 7Gender and age.................................................................................................................. 7Income................................................................................................................................ 7Attitude................................................................................................................................ 8Style.................................................................................................................................... 8Style and payment.............................................................................................................. 9

6. About eBillme.......................................................................... 10Payment process.............................................................................................................. 10

7. Conclusion.................................................................................. 118. About MODASolutions............................................................... 12


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1. IntroductionIn the spring of this year, MODASolutions, the company behind the eBillme payment option,commissioned leading retail consultants, JC Williams Group, to conduct a study of eCommerceshoppers. The result of this independent market assessment identified a lucrative and untappedconsumer segment.

This research report identifies the intersection between online shopping and online bankingusers, along with user profiles, behaviors and the opportunities that exist for online merchants.The focus of this study was to understand this key intersection between online shoppers andonline bankers who are they, and what are their behaviors and attitudes.

Objectives and methodologyThe objective of this study was to gain a better understanding of the intersection betweeneCommerce and online banking. An online survey was conducted in March 2007. The results arebased on a total of 1,077 consumers who use online banking.

To participate in the study, respondents had to meet certain criteria relating to online shopping

and online banking.

1. Respondents had to have made an online purchase in at least one of followingcategories:

Clothing and accessories; Furniture, home furnishings, and/or home decor; Consumer electronics; or Computer hardware and software.

2. In addition, they also had to be active online bill payers and have made at least two billpayments online in the past six months.

By way of contrast, the data collected in this survey was compared to a 2006 total US onlineshopping study that was conducted by JC Williams Group.

The purpose of this report is to highlight the research findings, and identify opportunities for onlinemerchants.

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2. Key Findings

Intersection of online bankers and online shoppersOne of the driving questions behind this report was what is the extent of the overlap between the

two large and growing populations of online banking users and online shoppers.

The answer is that half of the online shopping population in the US are also active online bankers.

High spender: Spends 117 percent more than the average online shopper.

Wants to pay cash: 76 percent expressed interest in using online bill pay to shop online.

Values security: 80 percent value a safe and secure payment option.

Online shoppers and bankers spend moreOne of the most exciting findings of this survey was the discovery that consumers who shoponline and bank online spend 117 percentmore than the average online shopper. The amountsspent for total online shopping over the past 6 months revealed that across all age groups, theseconsumers are spending a great deal.

This staggering increase in spending is a clear indicator that online banking consumers are ahighly sought after demographic for any merchant looking to increase sales and reach newconsumers.

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3. Profile of the Online BankerThe average online banking user was an early adopter of this technology and they felt it was asafe and convenient way to manage their finances. Almost 60 percent of the survey sample hadbeen banking online in excess of 6 years.

Comfort and experienceIn the past 6 months, this group had used online banking for a wide variety of services, includingbill and mortgage payment, fund transfer, and credit application. The breadth of financial activitiesdone through online banking was indicative of the experience and comfort level of these users.

When asked why they banked online, convenience, ease of use, and safety and security werecited as primary motivators.

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4. Attitudes towards Online Payment

Safety and securitySurvey respondents indicated that a payment option that was safe and secure was the most

important factor when shopping online. 80 percent ranked it as their primary consideration.

ChoiceThe survey revealed that online bill payers are spreading their online shopping transactionsacross a wide variety of payment types. This suggests that different payment options are usedunder different circumstances. Merchants can reach these consumers by offering choice thatextends beyond product selection, and into payment options.

When shoppers were asked how interested they would be in a payment option that enabled themto make online purchases through their online bank account, an overwhelming 76 percentexpressed interest. This clearly identifies that consumers are looking for online payment optionsabove and beyond those offered by their traditional credit card.

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5. Profile of the Online ShopperA snapshot of the average online consumer and online banker revealed:

More female representation;

A slightly younger demographic; and A strong showing from all income levels.

Gender and ageWomen accounted for 60 percent of the sample and the majority of respondents were in the 25 to44 year age category. This slightly younger crowd represents a population segment that isclassified as being in the key family formation stage of their lives. These are shoppers who aregenerally in the process of buying and furnishing a home, and they are often establishingthemselves in their chosen career.

IncomeThere was a strong representation across all income levels. A slightly lower income skew (versus

the total for online shoppers) is consistent with an age profile that draws from key family formationlife stage years.

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AttitudeConsumers have embraced the convenience and speed of eCommerce. Over 80 percent ofrespondents ranked saves time as the primary reason they shopped online. The availability ofdetailed product information and the ease with which they could comparison shop, were alsocited as key drivers.

StyleShoppers were asked to classify themselvesaccording to their style preferences. The overallresults were consistent with the total market.However, it was surprising to note thatrespondents who classified themselves as

trendy fashion shoppers were the most activein their online shopping behavior. Although thissegment made up only 16 percent of onlineclothing buyers, they spent far more than otherconsumers.

Another point of interest was that, consistentwith social networking and online communitytrends, trendy online clothing buyers placed ahigh importance on being able to get advicefrom their peers and other like-minded shoppers.

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Style and paymentRespondents who classified themselves as trendy were the most interested in a paymentmethod that would allow them to pay for their online purchases through online banking.

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6. About eBillmeLeveraging the impressive growth of online banking and online bill payment is a critical step incapturing this lucrative market segment. The ability to take advantage of the online bill paymentinfrastructure stems from the reliability, robustness, scalability, and the critical mass of consumers

who use it.

eBillme provides the bridge between consumers, merchants and online banking. It enablesconsumers to shop on the web or through call centers, and pay conveniently through their trustedbanking portals. To consumers, the functionality is familiar, since they already pay bills online,and they do not need to setup a new account or fill out any application forms. eBillme works atany bank, credit union, or online bill pay portal that offers online bill payment, making eBillmeavailable at over 13,000 financial institutions.

Payment processeBillme uses a simple two-step approach The consumer places an order with eBillme, and theyuse their own online banking website to pay for the order.

1. Shop

At the merchants checkout or call center, eBillme appears along with other payment options. Theconsumer selects eBillme as the payment option.

2. Pay for order through online bankingUpon selecting eBillme as the payment method, the consumer is prompted with an orderconfirmation page, which provides details on how to pay for the order through online banking. Inaddition, order confirmation is sent via email, as an eBill. The order confirmation instructs theconsumer to log in to their online banking system, and add eBillme to their payee list (only on firsttime eBillme orders). The consumer pays the eBill in the same effortless manner they pay otherbills.

Merchant notification of paymentThe merchant can fulfill the order at the time of purchase (at checkout) or when payment isconfirmed. Typically, payment settlement is transferred from eBillme to the merchants bankaccount in 1 to 3 business days.

eBillme leverages the existing bill payment infrastructure, a key component of which isMasterCard Internationals Remote Payment and Presentation Service (RPPS). RPPS provides aremittance and payment-processing network for approximately 95 percent of the industrys billand consumer service providers. As a third-party payment processor, MODASolutions utilizes theRPPS network to handle the transaction processing. RPPS enables merchants to receivepayments from the bank network.

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7. ConclusionThe intersection of online shoppers and bankers represents a market segment that is veryexperienced and comfortable in their online shopping and banking behavior. Their shoppingfrequency and spending will only increase as merchants begin to optimize their online checkouts

to meet the preferences of these customers.

The slightly younger age profile of these consumers is recognized as being in key familyformation and they are at a strong earnings growth life stage. What this means for retailers is thatthese consumers are buying the most products. They are very value oriented, and they know agood deal. Choice is important to them and they have rising expectations in terms of customerservice levels.

Merchants can capture this lucrative and savvy consumer segment by offering payment solutionsthat leverage the security and availability of the existing online banking network. eBillme, fromMODASolutions, is the alternative payment option that connects online banking consumers, withonline merchants.

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8. About MODASolutionsMODASolutions is the leading provider of payment solutions that extend online banking to themerchants checkout. The company is dedicated to increasing merchant sales by leveraging thepower of online banking, while reducing the security risks of shopping online for both consumers

and retailers. The companys flagship product, eBillme, does not require consumers to releaseany financial information when placing orders. Consumers can shop online, by catalog, or throughcall centers, and pay for purchases at their bank, credit union, or bill pay portal, with the securityand convenience of online banking. eBillme gives retailers access to over 84 million Americanusers of online banking.

MODASolutions Corporate Office260 Hearst Way, Suite 510Ottawa ON Canada K2L 3H1

MODASolutions US Office2207 Concord Pike Rd., Unit #510Wilmington, DE 19803-2908

Phone: 613-270-8755Toll Free: 866-365-6632Fax: 613-822-8107

Email: [email protected]

Website: www.MODASolutions.com www.eBillme.com

Copyright 2007 MODASolutions. All rights reserved. Information in this document is subject to change without notice.

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Reaching Big Spenders - The Online Banking Oppurtunity