Visa wants to get holiday Net shoppers charged up

Looking to jump-start the teetering e-tailing sector, the credit card company unveils promotions aiming to attract more online shoppers this holiday season.

2 min read
Visa is hoping to jump-start the teetering e-tailing sector with promotions geared toward drawing people online to shop during the approaching holiday season.

The credit card company announced Tuesday that its cardholders will receive discounts when shopping at certain online sites, including the Sunglass Hut Web site, Cooking.com and CDNow. Visa has also formed an alliance with America Online, giving consumers an opportunity to enter a sweepstakes when registering their Visa cards in AOL's Quick Checkout wallet technology.

Although many industry watchers expect a strong online holiday shopping season, consumers may be wondering whether there will be any merchants standing after the relentless news of bankruptcies and shopping site closures subsides.

On Tuesday, Pets.com announced it was closing its virtual doors, and Furniture.com announced its demise Monday.

American Express, one of Visa's main competitors, is not introducing any specific holiday-related promotions but will continue to work with merchants to instill confidence in consumers who may be thinking about buying online this holiday season, a company representative said.

MasterCard is also trying to bank on the holiday shopping spirit by entering its card members in a $250,000 sweepstakes if they make an online purchase between Oct. 1 and Dec. 31, according to a page that lists the company's online exclusives. The company said it regularly offers 20 percent discounts when members shop at certain online merchants.

Credit card companies have been pushing to boost consumer confidence in online shopping because of the big commissions they receive from online merchants for every transaction. The dominant card companies on average have been charging e-tailers a greater commission rate than their brick-and-mortar competitors because of what they consider the higher risks associated with online fraud.

American Express said that its average rate--between brick-and-mortars and e-tailers--is about 2.73 percent, but that Internet retailers usually face stiffer rates.

Visa is hoping its promotion will convert the reluctant browser into an actual shopper. A company survey found that 43 percent of online shoppers consider themselves to be researching a product rather than buying online. Visa has set a goal to increase e-commerce transactions from 2 percent of its overall volume to about 10 percent by 2004.

Holiday sales reached a record level last year, hitting $7 billion, according to New York-based research company Jupiter Media Metrix. The figure represents a 125 percent increase over 1998 holiday sales.