In a survey of consumers preferred credit card brand for Internet shopping, the Discover card came out on top this year, ousting First USA, which took first place in the three previous surveys.
First USA, from Bank One Corp., slipped to sixth place, and the brand issued by Discover Financial Services moved up from fourth. Citigroup Inc. came in second and was followed by Capital One Financial Corp., NextCard Inc., and American Express Co. in the 3,000-consumer March survey by Brittain Associates Inc., a research and consulting firm in Atlanta. The results could reflect the investments that Discover, which is owned by Morgan Stanley & Co., has made in marketing and technology in the last year. New television and print advertisements feature merchants that have begun accepting the card.
Morgan Stanley has made an equity investment in the digital wallet provider Brodia, which developed a customized wallet for Discover that lets cardholders mask their account numbers by sending one-time-use numbers to e-merchants.
Being top of wallet has always been a priority for card issuers, but the Internet has made it an even higher priority, since people tend to lock in one card for the Web.
Over half of those surveyed say they always use the same card online, said Bruce Brittain, president of Brittain Associates, which did the first of these surveys in October 1998. Then we ask, Whose is it? and that is where Discover comes to the top.
On the other hand, Mr. Brittain said First USA has apparently lost its early momentum in Internet leadership. The conventional wisdom is they have had to back off a bit on resources they have put against their Internet strategy.
Mr. Brittain added that consumers who have a favorite online card tend to gravitate to cards that give them something back such as Discover, with its cash-back reward feature. Consumers tell Brittain Associates that using one card helps simplify bookkeeping or lets them take advantage of reward points.
According to Discover, 4.5 million cardholders more than 10% of its 43.7 million card account base have registered at Discovers Web site.
Though credit card issuers including Discover are giving customers more ways to keep their credit card numbers safe from thieves, Mr. Brittain said security concerns are not a big deal to most Web shoppers. Only 11% of those surveyed said that those fears have caused them to forgo an online purchase.
Hardly anybody mentioned security or privacy concerns as their first reason for not shopping, Mr. Brittain said. They stop because the color is not right, the price is not right, or they dont have their size.
Discovers Colleen Zambole, vice president of e-commerce, said, If you ask me am I concerned about shopping on a large online brand name, I might agree, but if I found something at some obscure site, that is where I heard back from consumers that single-use account numbers are appreciated.
Discover regularly adjusts its online offerings in response to customer feedback, Ms. Zambole said. For example, she said, this feedback led to Discovers e-mail alerts, which tell consumers when a payment is becoming due or an account line is nearing its limit.