The Effect of Rising Fraud Levels on Consumer Trust

Earning Consumer Trust 

More than £1.7m a day was lost to financial fraud across payment cards in the UK last year. This news has inevitably had a negative impact on consumers’ trust in online banking and shopping.

For online merchants to increase their revenue, consumers must trust that their personal and payment details are secure at all times. This means merchants, banks, payment service providers (PSPs), acquirers and issuers’ technology must be secure.

Fraud: Continuing to shape the payments landscape                                                

MYPINPAD’s recent consumer trust survey discovered that security is the priority for most consumers when it comes to online purchases. 67 percent of respondents were concerned or very concerned about online shopping and banking. Only 2 percent of those surveyed said that they would rather have a fast transaction over a secure one.

Our results indicate that consumers are becoming more worried about fraud. A sign that banking institutions and PSPs need to step up their security efforts in order to maintain consumer confidence.

Respondents said they expect the security of online commerce to improve over the next five years, and merchants must rise to these expectations. The use of both PIN and biometric based authentication was identified as the most significant step online retailers and banks could take to improve consumer trust, whilst many consumers believe the use of PIN is a strong method to authenticate and secure a transaction.

When asked what online retailers and PSP’s could do to improve the trust consumers have in them, 40 percent of respondents wanted to use card PIN as a means of authenticating an online transaction (in a similar vein to that of an in-store Chip & PIN environment) and 50 percent would like the option to use a combination of card PIN and biometrics.

The ability for consumers to enter their card PIN securely in to their own mobile device to authenticate an online transaction is a significant and innovative step in the evolution of online payments. Entering a PIN into a mobile device facilitates Strong Customer Authentication (SCA) by verifying the identity of a person through something you have (the consumer’s mobile phone), something you know (their card PIN number) and with an additional layer of something you are (a biometric such as a fingerprint).

As the popularity of online shopping continues to grow so has the level of fraudulent activity. Consumer authentication now has no choice but to be multi-factor, consistent and convenient. Due to the fact PIN is a universally accepted form of authentication, it is already a habitual behaviour for consumers when making a purchase. Entering a PIN is familiar and trusted, providing a level of security consumers are comfortable with.

If compliance and implementation of scalable security systems is done correctly, PSPs, issuers, acquirers and merchants will have the opportunity to transform the online and mobile industry as we know it; improving the customer experience, enabling greater transaction volumes, and adding to the value of the merchants’ services they deliver.

Click here to find out more about how MYPINPAD’s Consumer Trust Solutions (CTS) can assist in increasing consumer trust and retention.