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New Report: Majority of Online Consumers Would Buy More With Safer and More Convenient Pay Options

Billions Lost - Local Phone and Broadband Bills Are Top Consumer Choices for Charging Small Digital Purchases

SAN JOSE, Calif., - June 27, 2006 — The results of the 2006 Annual Javelin Consumer Payment Poll indicate that the majority of online consumers would buy more if safer and more convenient payment options were offered. The Payment Poll responders would each spend $960 more per year if better payment options were available online, which, based on over 15 million active online buyers, translates to $14.4 billion of lost revenue opportunity for digital merchants.

For the fourth straight year, a majority of consumers (74%) indicated a willingness to spend more online if given safe, convenient payment options beyond the credit card. More choice in payment options was the overwhelming driver of purchase behavior by a three to one margin over improved content and by a six to one margin over more affordable broadband access.

Commissioned by PaymentOne, the poll results were published by Javelin Strategy & Research in June 2006. The poll surveyed over 2,000 U.S. consumers regarding their online payment preferences around digital content and services. Music, software, online games, security services, content subscriptions, personals, video, and related premium services were among the top categories of purchase interest among the consumers polled.

74 Percent of Consumers Would Buy More in 2006, up from 61% in 2003

Consumers are increasingly interested in using payment options that are safer and more convenient than credit cards. 74 percent of decisive consumers polled say they would "be more inclined to purchase online if given a safer, more convenient payment method than credit card." This is down slightly from an average of 77% in 2004 and 2005, and up significantly from 61 percent in 2003.

The numbers among younger consumers aged 18-34 were even higher, with over 79 percent indicating they would buy more
85% of fast growing Asian and Hispanic ethnic segments also showed much more likeliness to buy if given payment alternatives to credit card
Among middle and higher income segments of $50-$150K per year, 80% indicated they would buy more

"The major finding of the poll is that the availability of secure and convenient payment options beyond traditional credit and debit cards can drive significant incremental purchases, subscriptions and transactions. This is an outstanding opportunity for online merchants to grow revenue through the introduction of payment alternatives," said Bruce Cundiff, Research Analyst, Javelin Strategy & Research.

Majority of Consumers Cite Privacy and Identity Theft Concerns

Despite aggressive campaigns by merchants and card companies, fraud and identity theft concerns still loom large for a significant number of consumers and hinder online shopping growth:

54% of those polled curtail their online shopping due to fears that their privacy or financial information (or both) will be abused or stolen.

The top concern (36%) is that information will be either intercepted during a transaction or accessed by unauthorized parties.

In addition to credit card holders who had significant concerns about buying online, 16 percent of consumers stated that they were not able to transact online because they did not possess a credit card, which represents a large opportunity for merchants who can address this underserved segment.

Joe Lynam, President and CEO of PaymentOne stated: "Consumers, including younger demos and those with substantial disposable income, continue to tell the industry that they want a safer, more convenient way to pay online. Deploying advanced payment options represents a significant growth opportunity and competitive imperative for online merchants, and unlike other major product or service enhancements, does not require up front investment."

Over 70% of Consumers Have Abandoned Purchases at Point of Payment - Billions in Lost Sales

The new study found that over 72% of shoppers have abandoned purchases at the point of payment, representing millions of dollars of lost sales for merchants.

When asked how much more a consumer would spend if there were easier and safer alternatives to credit card, results showed an average increase in spending of $49-$158 per month, or an average of $960 per year per consumer. For 15 million active online shoppers, this represents over $14.4 billion dollars of lost sales.

Small Digital Purchases More Likely With "No Credit Card Required" Options - Consumers Prefer Local Phone Bill for Charging Smaller Purchases

Nearly half of all consumers indicted they are more likely to buy if "No Credit Card Required" options are available at the digital sites.

"No credit card required" payment options represent significant potential for content providers and network operators to attract more consumers. Consumers are increasingly interested in charging digital content and services to an existing trusted bill. In fact, when asked specifically which existing bill they would like to add small purchases to, consumers overwhelmingly pick their existing phone bills:

Over 60% of decisive consumers would prefer to add online charges to their existing local phone and/or broadband bills instead of credit card.

These existing bills are generally trusted, easy and convenient methods for consumers to utilize for making digital goods and services purchases. Since phone service is considered a necessity by most, it's one that the typical consumer will not allow to lapse. These existing billing instruments are especially attractive because they reduce the need for consumers to establish multiple, separate billing relationships, and do not require them to repetitively disclose sensitive information across multiple sites for small purchases. For merchants, existing bills now offer attractive economics and high retention and stickiness.

"For over half a decade, PaymentOne's flagship PhoneBill service has enabled consumers to simply charge digital services to their existing phone and broadband bills, without having to disclose sensitive private financial information," added Brad Singer, Executive Vice President of Products and Markets at PaymentOne. "With wide broadband adoption, the existing trusted consumer bill has become a preferred pay option and we are seeing more and more demand for our advanced payment platform and assessment services, which enable merchants to deploy a variety of safe and convenient payment options that better meet consumer demands, and have proven to increase new revenues 25 to 35 percent or more."

PaymentOne clients alone have generated over $2 billion in incremental revenues by deploying "no credit card required" payment options, and have acquired millions of new subscribers that were previously unreachable.

For a complete copy of the 2006 Annual Consumer Payment Poll, please visit http://www.paymentone.com/2006poll.

Media interested in speaking with Javelin Strategy & Research directly may do so by contacting Colette Woodruff at 925-225-9100, or via email at cwoodruff@javelinstrategy.com

Study Background and Methodology

Javelin Strategy & Research undertook a consumer poll in order to determine consumers' willingness to make purchases online; desire to make small value purchases online; and the attitudes that affect payment choices. The poll was conducted in March, 2006, among 2,038 consumers (n = 2,038). The poll utilized a random-sample poll using opt-in remunerated participants and targeting respondents based on representative proportions of gender, age, and income, as compared to overall US online population. Although actual confidence intervals vary per unique question and response, this poll generally provides a margin of sampling error of ±2 percentage points at the 95 percent confidence level.

About PaymentOne

PaymentOne Corporation is one of the world's fastest growing online Payment Services Providers (PSPs). Founded in July 2000, PaymentOne has pioneered payment and marketing services that connect digital merchants and network operators and accelerate the adoption of online content and services by over 25%.

Based in Silicon Valley, PaymentOne has generated over $2 billion in new digital revenue over the last 24 months for its clients and partners. The company manages a network of over 1000 telecommunication/broadband providers, mobile operators and content partners including leading ISPs, BSPs, Telcos, broadband operators and media companies such as America Online, United Online, NetZero and Time Inc.

To help online merchants attract, convert and retain a wider audience, PaymentOne's integrated suite of revenue optimization services include a unique set of non-credit card payment alternatives, macro and micro payments, identity verification and fraud detection, traditional payment processing, global payments, and a co-marketing distribution network. The company's flagship PhoneBill service provides merchants with access to over 180 million consumers with mobile, broadband and land line accounts. To learn more about PaymentOne, visit www.PaymentOne.com or call 800-747-4028.

About Javelin Strategy & Research

Javelin provides independent, action-ready research and strategy consulting, focused solely on the financial services and payments industries. Javelin's research-based guidance factors in the interdependence of consumer and business end-users, financial services providers, payments firms, technology vendors, merchants, billers and other third parties to align opportunity with action. Javelin can be found on the web at www.javelinstrategy.com.

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"In today's economy, triple-digit percentage revenue growth is an exceptional accomplishment. We commend PaymentOne for making the commitment to technology and delivering on the promise of market longevity"