UK shoppers find fraud ‘inevitable’ online

The majority of UK consumers now accept the risk of fraud when shopping online as the growth of e-commerce shows no signs of slowing down, according to Paysafe.

The payment solutions provider surveyed 5,056 consumers from the US, UK, Canada, Germany and Austria, with 70 per cent of British respondents stating that they now prefer shopping online rather than going to physical stores, while 68 per cent shop online much more than they did a year ago.

This is despite 65 per cent of consumers accepting that a certain level of e-commerce fraud is inevitable during the process - up from 52 per cent in last year’s study - underlining the increasing value consumers put on convenience.
One third of UK shoppers said they have experienced payment fraud in the past year, up six per cent on 2017.

When shopping online, 61 per cent have used digital wallets in the past month, 34 per cent have used a credit card, and 57 per cent a debit card.

Meanwhile, 51 per cent are using in-app purchases more than a year ago, as the popularity of services such as Uber and Deliveroo change the traditional payment process by retaining customer information for a seamless app experience. In fact, 79 per cent now say they prefer to shop on a website that already has their payment information stored.

However, data shows these attitudes do not translate to frictionless payments, which are being held back by UK consumer concerns over security and data privacy. Paysafe found that 52 per cent of UK consumers cite fraud as the biggest barrier to using them, while 43 per cent express concerns around the use of their data and two thirds think voice-activated systems are not secure.

Cash still continues to be the most common form of payment though, with 88 per cent of consumers using it in the past month to make a purchase, although 62 per cent of UK consumers carry less cash than they did a year ago.

Across different countries the picture differs. In Austria and Germany, online cash replacement systems which negate the need to share financial data are used by 12 per cent and 9 per cent of respondents respectively.

In North America, prepaid cards are the most popular cash alternative, used by 18 per cent of Canadians and 16 per cent of Americans respectively. In the UK, 67 per cent of consumers said they feel more comfortable purchasing online via a payment option where their financial details are not shared.

Oscar Nieboer, chief marketing officer for the Paysafe Group, said UK consumers’ attitudes towards fraud in payments are largely defined by the medium of the transaction.

“In the UK, we have now reached a level of maturity in online retail – most websites are optimised, the checkout process is increasingly simple and delivery is getting quicker,” he stated. “In turn, more consumers are telling us they are accepting a level of fraud for this convenience.”

He noted that the same rules do not yet apply to biometrics, such as voice-activated payments. “The idea of a consumer’s unique biometric data being defrauded is uncomfortable, and this manifests as emerging technology like voice not yet attracting mainstream usage for payments,” added Nieboer.

Only 28 per cent and 26 per cent of German and Austrian consumers accept a level of fraud is inevitable, which is why pay by invoice is popular in these regions. The research showed 29 per cent of Germans and 38 per cent of Austrians have used this method, which circumnavigates the entry of payment details online, with offline verification and authentication replacing it.

David Emm, principal security researcher at Kaspersky Lab, commented that not all retailers have raised the bar when it comes to security.

“Cybercriminals have become more skillful and sophisticated, they have eroded the effectiveness of traditional perimeter-based security controls. For example, the swift development of biometric technologies over the last few years has given us the capability of using our bodies for authentication, and many organisations are keen to implement solutions as soon as possible,” he stated.

“However, consumers are right to be wary about the technology – as the stakes are much higher with stolen biometric data than a password. Using biometrics as a replacement for usernames, rather than passwords, makes more sense.”

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