E-commerce in APAC is thriving, but so is online fraud

E-commerce in Asia-Pacific is booming, with 71% of consumers in the region already shopping online. But so is the risk of fraud, with one in five consumers falling victim, according to new report from Experien.

The report, co-authored with IDC, also found that over half of consumers would switch service providers in the event of fraud, proving that consumers are willing to trade convenience and a better customer experience for better fraud protection.

There were also distinct differences in consumer attitudes between countries.

In mobile-led, emerging markets, people were more convenience-driven and less risk-averse, with the more security-conscious individuals tending to come from mature economies.

“We notice that in more mature economies like Hong Kong and Singapore, consumers are largely more aware of fraud risks and act in a more conservative manner,” said Ben Elliott, CEO of Experian APAC.

“This means they may sometimes avoid transacting online should they perceive a potential fraud risk. This is in contrast to emerging economies like Vietnam, where consumers are less fraud aware and more convenience driven.”

Technology transformation

While the unfortunate reality is that greater digital convenience is linked to higher fraud exposure – presenting a problem for both consumers and businesses – the report also revealed that there was a silver lining.

It found that as consumers became aware of the risk of fraud, they were more likely to adopt security measures like biometrics, including fingerprint, facial and voice recognition.

In APAC, 13% of consumers are now willing to adopt biometrics, with India (21%), Vietnam and China (both at 18%) leading the charge as early adopters. Australia (9%), Japan and New Zealand (both at 8%) are the least willing to do so.

Interestingly, however, a significant 57% of consumers are already comfortable with biometrics in government/non-commercial applications.

As acceptance extends into the commercial sphere, this new technology will increasingly be able to provide a more efficient customer experience and enhanced fraud protection.

Data dilemma

At present, one of the best ways companies can protect their customers is by leveraging high-quality customer data to effectively verify transactions.

However, the report found that this was easier said than done, with consumers often selective in the type of information they were willing to share with companies. They were also clear on how they wanted their personal data to be used.

For example, when asked, 43% of consumers were willing to have their personal data shared with businesses specifically for better fraud detection over convenience or a better customer experience.

Furthermore, 5% of APAC consumers said they had intentionally submitted inaccurate information to avoid disclosing personal data, while 20% had made mistakes in the details they provided to businesses.

Data input errors were highest in Thailand, followed by Vietnam, Indonesia and India, while Japan had the lowest erroneous submissions followed distantly by Singapore and Hong Kong.

Elliott said this indicates a gap in trust between businesses and their consumers, but also provides a significant opportunity for them to make improvements.

“Intentional non-disclosure of information heightens the challenges businesses already face in combatting fraudsters and ascertaining the identity of genuine customers,” added Elliott.

“We believe that this is fundamentally an issue of trust – and companies must do more to communicate the value to consumers about the use of data for fraud protection and that they can be trusted as custodians of personal data.”

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