Fifty nine percent of Americans now think fraud is an inevitable part of shopping online, and nearly the same percentage — 58% — are willing to accept whatever security measures it takes to protect them from fraud, according to new research conducted by payments company Paysafe.
Another 71% of consumers are open to the introduction of more secure payment processes such as two-factor authentication, and the amount of time spent navigating additional security processes appears to be of little concern to them, as only 12% of American consumers abandon online shopping carts due to payment security taking too long, according to the study "Lost in Transaction II."
By contrast, the study found that only 39% of U.S. businesses said their customers would favor tighter security, and 67% think longer verification processes increase their risk of losing customers via cart abandonment.
This study, the second volume of a project commissioned by Paysafe and conducted by Loudhouse, was completed by surveying 300 businesses and 3,038 general consumers in the U.S., U.K. and Canada about their attitudes to fraud, security and payment methods. The results of the first volume show that consumers can envision a future in which they are no longer carry cash, but also that a lot of them are still wary of using biometric security capabilities.
A month after the big Equifax data breach fiasco came to light, it should come as no surprise that consumers think fraud is inevitable. That's a cold reality as retailers prepare for a busy holiday shopping season. The big question retailers should be asking themselves is, are they doing everything they can to reduce that risk, and to protect their customers?
It’s a bit alarming to think that as retailers could be poised to lose $71 billion to e-commerce fraud over the next five years, some of those retailers might be putting off adoption of new security measures because they think shoppers don’t want to deal with the steps or time associated with extra security measures.
Everyone in the sector is rightly concerned with reducing friction around both in-store and online checkout, but according to this study, at least 37% of shoppers say the main drivers behind their abandoned shopping carts are hidden transaction fees and delivery charges, not security delays.
It’s important to note these businesses aren’t against security. Many want to get rid of less secure modes of payment, such as credit card, debit cards and checks, according to the study. Meanwhile, they are set to embrace more modern and more secure payment forms. For example, almost a third of them are likely to introduce payment via voice-activated systems like Alexa within two years, while nearly one in five favor some form of biometric payment and a quarter are looking to introduce cryptocurrencies. In addition, 23% are planning to introduce mobile wallets.
One further key issue highlighted by the report is the trade-off merchants face when balancing risk and revenue generation. About 67% of businesses surveyed want to increase customer sign-ups and transaction volumes by reducing risk thresholds for ID verification. But, curiously, 76% also want to produce more effective verification measures to reduce fraudulent transactions, a potential conflict with their revenue ambitions.
What’s increasingly clear is that while a lot of companies want to do something about security threats and the growing fraud problem, they also weighing these efforts against impact on revenue generation and customer experience. That’s not necessarily a bad thing, unless they are mistaken about the reasons why consumers are walking away from those revenue-generating transactions before they happen.