Jakub Jirsák - stock.adobe.com

Consumers accept fraud danger as online shopping increases, research finds

The majority of UK consumers see the threat of online fraud as “inevitable” as e-commerce popularity rises

The majority of consumers accept they are vulnerable to online fraud as online shopping continues to increase in popularity, research by Paysafe has found.

The payment services provider surveyed 5,056 individuals from the UK, US, Germany, Austria and Canada. It found that 68% of UK respondents preferred online shopping, yet 65% agreed that falling victim to fraud was “inevitable”.

The latter figure marks a 13% increase on last year, and Paysafe Group’s CEO of merchant acquiring, Andrea Dunlop, said consumers were right to be cautious about payment security as online shopping becomes more convenient.

“Since the e-commerce explosion in the late 1990s, the web has been a fertile ground for hackers targeting consumers with weak security defences, and the sector’s recent emphasis on simplicity and speed of payments inevitably leads consumers to acknowledge a degree of risk as a trade-off,” she said.

“Although there is some risk of fraud in online shopping, consumer protection and chargeback rights are in place so that customers can still have confidence in using e-commerce.”

A third of the UK respondents said they had fallen victim to payment fraud over the past year, up 6% on the previous 12 months. The average loss was £180, with 69% of the cases resolved in one week.

The report also highlighted the popularity of contactless payments for in-store transactions. Over the previous month, 54% of the UK shoppers had used this form of payment, compared with 3% in the US.

“The popularity of contactless in the UK today speaks to the changing nature of consumers’ relationship with cash and wider payment methods,” said Dunlop.

“The confidence UK consumers have in contactless today paves the way for emerging payments technologies such as iris scanning, voice banking or checkout-free shops to be successful, although these technologies have yet to be tested on a mass scale.”

In May, Paymentsense revealed 42% of the UK’s payments in 2017 were made using contactless, growing by 30% since 2016. However, the company’s head of digital and tech, Chaif Badr, said the £30 contactless payment cap was preventing contactless payments from becoming more prevalent.

This view was echoed in Paysafe’s research, which found 45% of the UK respondents wanted a higher limit, compared with 36% in 2017. However, as with online shopping, the majority (64%) of respondents were concerned about the risk of fraud with contactless payments.

“The recent emphasis on simplicity and speed of payments inevitably leads consumers to acknowledge a degree of risk as a trade-off”
Andrea Dunlop, Paysafe

The study also found some resistance across respondents to frictionless payments, a form of transaction where the user does not take out a wallet or smart device.

Over half of the UK shoppers again cited fraud as the biggest problem with this, and when using voice systems such as Google Home or Amazon Alexa for purchases, 67% of respondents said they would be worried about data security. 

Respondents also expressed concern about the artificial intelligence (AI)-based shopping platform, Amazon Go, which enables customers to pick up items from the store and walk out, with their card automatically charged. Of the survey respondents, 56% considered it either too risky or lacked the knowledge to trust it.

Dunlop said frictionless payments were just as secure as digital wallets, where consumers pay with a debit card loaded to a mobile device, but providers could do more to persuade them to use the latest transaction method.

“Consumers’ lack of experience with frictionless payments poses a significant obstacle in the way of their development. [They] are much more comfortable when the payment involves taking some kind of action, like pressing a button or using their fingerprint to authenticate a transaction,” she said.

“Providers should work to increase their experience with frictionless payments while working to integrate additional features such as budgeting technology or transaction frequency monitoring to appease consumers’ other concerns about the technology.”

Read more about e-commerce

Read more on E-commerce technology

Data Center
Data Management