MONTREAL--(BUSINESS WIRE)--More than half (53 percent) of Canadians think fraud is an inevitable part of shopping online, according to new research conducted by Paysafe, a leading global payments provider. In a wake-up call for online business, the Lost in Transaction report contradicts the widely-held belief that consumers value convenience and experience over security when shopping online. Instead, 57 percent of consumers are willing to accept any security measures needed to eradicate fraud, while nearly two thirds (60 percent) are open to the introduction of more secure payment processes such as two-factor authentication.
By contrast only 38 percent of Canadian businesses believe their customers would favour tighter security, and more than half (59 percent) think longer verification processes increase their risk of losing customers. In fact, only 9 percent of Canadian consumers abandon online shopping carts due to payment security taking too long; while the most significant driver of abandoned carts is hidden transaction fees and delivery charges, according to 45 percent of consumers.
One further key issue highlighted by the report is the trade-off merchants face when balancing risk and revenue generation. 60 percent of businesses surveyed want to increase customer sign-ups and transaction volumes by reducing risk thresholds for ID verification. But 66 percent also want to produce more effective verification measures to reduce fraudulent transactions, a potential conflict with their revenue ambitions.
These conflicting views exist even though transactional fraud is a top priority in the boardroom, according to two thirds of businesses (62 percent). In addition, 40 percent of merchants say that over 5 percent of their transactions are fraudulent. In this context, 8 out of 10 businesses expect to increase spend on fraud in the next 12 – 24 months, typically by at least 9.5 percent.
Commenting on the research, Daniel Kornitzer, Chief Product Officer, Paysafe stated: “This report clearly highlights the tensions that exist where merchants come under increasing pressure to eliminate barriers to the purchasing experience, while at the same time being expected to strengthen and evolve security measures.
“We’re all guilty of saying one thing but doing another. Consumers say they’re up for extra security measures but when it comes down to it, will their clicks follow their talk? I think we’ll see different realities emerge across geographies and demographics. However, we believe that it is possible to reduce the incidence of fraud while, at the same time, enhancing the consumer experience.”
Another way in which businesses intend to tackle fraud is by reducing their dependence on traditional payment methods. 43 percent of Canadian businesses would like to see a decline in payment by credit cards, with debit cards and cheques not far behind. The susceptibility of these payment methods to fraud is a significant factor, with credit cards being ranked as the most vulnerable to fraud by 62 percent of respondents, followed by cheques (44 percent) and then debit cards (26 percent). This is an area where consumer and business views align – one in five consumers have experienced credit card fraud in the last year, with more than a quarter receiving no reimbursement.
The desire to phase out traditional payment channels is matched by a corresponding business interest in emerging payment methods. One in six businesses are likely to introduce voice-activated systems like Alexa within 2 years, 15 percent favour some form of biometric payment and nearly one in five are looking to introduce cryptocurrencies. This is on top of the 29 percent who are planning to introduce mobile wallets. Consumer behaviour is also helping to drive these changes, with one in seven adopting mobile wallets; 10 percent having used biometric and voice activated systems and one in ten percent already using cryptocurrencies for payments.
Paysafe’s Daniel Kornitzer concludes: “It’s not surprising that businesses are looking to the future for better detection and prevention, at everything from biometrics to voice activated systems. Increasingly, machine learning is being used to lower fraud rates, lower the amount of manual reviews and increase conversion. By encouraging consumers to embrace emerging payment technologies, businesses will be able to improve the security underpinning the payments process. In this way they will satisfy the reasonable consumer demand for a secure process both online and at POS payments.”
To read Lost in Transaction: Volume II, which includes comparisons between consumer and business attitudes to fraud, security and alternative payment methods in the US, UK and Canada, click here.
About Lost In Transaction
Lost in Transaction is an independent research project commissioned by Paysafe and supported by the London-based agency Loudhouse. The research report was completed by surveying 300 businesses and 3,038 general consumers in September 2017 in the UK, Canada and the USA about their attitudes to fraud, security and payment methods.
Paysafe is a leading global provider of end-to-end payment solutions. Our core purpose is to enable businesses and consumers to connect and transact seamlessly through our industry-leading capabilities in payment processing, digital wallets and online cash solutions. Delivered through an integrated platform, our solutions are geared towards mobile-initiated transactions, real-time analytics and the convergence between bricks-and-mortar and online payments. With over 20 years of online payment experience, a combined transactional volume of US$48 billion in 2016 and over 2,300 staff located in 12 global locations, Paysafe connects businesses and consumers across 200 payment types in over 40 currencies around the world. Paysafe Group plc shares trade on the London Stock Exchange under the symbol (PAYS.L). For more information, visit: www.paysafe.com.