Customers are more aware of issues around security than ever before according to Paysafe’s most recent study on consumer attitudes and expectations, Lost In Transaction: Volume II. Almost half of respondents from the UK, US and Canada told us they think the risk of fraud is an inherent part of e-commerce. And a convincing 81% take proactive steps to limit their exposure to it, including the avoidance of unsecured or public WiFi when shopping online.
Regardless, fraud is still a problem. One in five customers who fall for it permanently lose substantial amounts of money. And, more to the point, even those who recover at least part of their losses — thankfully, a majority of cases — permanently lose trust in the merchant involved.
Which means merchants with lax or ineffective security can seriously damage their reputation and, in turn, their prospects of long-term success.
With this in mind, Paysafe’s Lost In Transaction: Volume II also explores merchants’ attitudes to security and their overall preparedness in the fight against online fraud.
Here’s what we found out.
The importance of robust fraud prevention measures isn’t in dispute. For 71% of merchants, addressing fraud is a top priority at board level. And almost 80% told us they intend to increase their anti-fraud budget by at least 10% in the next 12 to 24 months.
Translating these good intentions into effective real world measures, however, is more of a challenge.
Conventional methods such as bank account and proof of address checks are still the most popular verification techniques, despite advances in biometrics, big data and other technologies. Case in point, only 15% of US merchants and 14% of Brits and Canadians use biometrics to target mobile users.
What’s more, 36% of merchants only review their fraud prevention measures every 12 months or less. This is hardly satisfactory, given the rapid pace of change in the e-commerce landscape and cybercriminals’ track record of adaptability.
There are various reasons for the disconnect between merchants’ intentions and the processes they actually have in place.
For 61% of them, the cost of fraud prevention remains a significant issue. And this is further compounded by the perception — shared by 40% of respondents — that continuous evolution in the digital e-commerce space quickly makes any new anti-fraud measures ineffective.
More significantly, however, many merchants fear the impact more robust fraud prevention measures could have on the customer experience and, consequently, on their bottom line. As many as 72% think customers will either resist enhanced security or take their business elsewhere. And a further 34% said they’re concerned it would make them less user friendly.
Put another way, merchants often feel like they’re damned if they do and damned if they don’t. As much as there’s pressure to crack down on fraud, there’s also pressure to increase transaction volumes and drive more sales, by making the payment process as frictionless as possible — objectives that are often considered at odds with more stringent security.
Merchants aren’t wrong to focus on delivering seamless shopping experiences. As volume 1 of our Lost In Transaction report shows, customers do value convenience. So much so, that it’s reshaping the way they shop and also driving adoption of mobile wallets and other alternatives to cash.
But as much as they want shopping to be quick and easy, customers also want to stay safe online. In fact, for 58% of customers security comes first, even if it makes payment less convenient.
Clearly, this calls for a shift in mindset. One in which security is no longer a compromise to make, but an element that’s just as integral to the customer experience as speed and ease of use.
Far from being simply a measure that could impact the bottom line, more robust fraud prevention builds a foundation of trust with consumers that’ll increase their satisfaction and secure their loyalty for years to come.
Want more insights on the challenges facing merchants when it comes to reducing and preventing fraud? Download the full Lost in Transaction: Volume II report.