Consumer “frustration” with passwords during online shopping is resulting in a “significant” loss in sales and repeat business for British retailers, according to research.

Digital identity body the FIDO Alliance questioned 1,000 consumers in the UK, and found that two-thirds (66 per cent) of them have abandoned purchases due to the “difficulty of managing passwords”.

They cancelled transactions because they either could not remember their password or were being forced to create a new account and password to make the purchase.

The research also identified several reasons for a potential loss of repeat business, as multiple factors stop people from setting up new accounts after making an initial purchase.

Their chief concern (37 per cent) was that they don’t want their financial information to be stored on retailers’ databases.

Having to enter billing and personal data (31 per cent) was another top reason, and passwords were again a source of frustration, with 29 per cent stating that having to set up and remember a new password would stop them from opening an account.

Andrew Shikiar, executive director at the FIDO Alliance, said: “Many common online retail practices, like setting up new passwords and accounts, are being rejected by consumers and consequently hurting retailers’ bottom lines.

“These outdated processes introduce friction into an experience that people rightfully expect to be as smooth as possible.”

He added: “While historically there has been little that merchants can do other than to be frustrated at password-related losses, that is no longer the case - retailers need to look for new solutions to remove needless friction from online transactions or run the risk of losing customers to the competition.”

The FIDO (Fast Identity Online) Alliance is an industry body that promotes standards and solutions that tackle user problems in creating and remembering multiple usernames and passwords.

According to the research, consumers “overwhelmingly prefer” retailers that enable them to log in and make transactions simpler by using their on-device biometrics, such as a fingerprint or FaceID.

Over two-thirds (68 per cent) of consumers believe these on-device methods are quicker than using traditional two-factor authentication requiring both a password and a one-time password (OTP), and 65 per cent believe they are easier to use.

In addition, 59 per cent believe retailers offering on-device authentication “care more about their customer experience”, 55 per cent believe they “care more about their privacy”, and 55 per cent think “they care more about their security”.

They are also more likely to recommend these retailers to friends and family, with 57 per cent stating they would do so.

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