With people being encouraged more and more to pay for things by digital means due to the Covid-19 pandemic, there are growing concerns about the rise of fraud and the need for tighter security.
Danny Chazonoff is Chief Operating Officer at Paysafe, a global provider of payment solutions to businesses of all sizes. Danny was part of the team that founded Paysafe in 1999 and has throughout his 20+ years with the company maintained his focus on growth – both organic and through acquisitions –strategic delivery, and developing a high energy, fun and rewarding culture.
Here he shares his thoughts on the importance of payment security during the Covid-19 pandemic.
It’s no secret that the potential for fraud increases during a crisis, and the turmoil created by Covid-19 and its combination of financial and health threats has created the perfect storm for the fraudsters which have been waiting in the wings.
Even before the pandemic, the security of online payments was paramount for both consumers and businesses, even when compared with user experience and convenience. We have been tracking the views of businesses and consumers on the security of financial data, and their fears of being a victim of fraud, for a number of years through our Lost in Transaction research series.
Back in 2018, 74% of businesses told us they felt they were being targeted by fraudsters more than the previous year, and so security was a key criteria for more businesses (59%) than any other when considering payments providers. In the same year 59% of consumers told us they felt uncomfortable sharing their financial information online to make a payment, and in 2019 more than half (56%) of consumers said they were concerned that switching from passwords to biometric authentication for digital payments would result in a dramatic increase in fraud.
And despite the world being shaken to its core in the wake of Covid-19, online payment security remains the primary concern of businesses. In fact, it has become even more of a concern than ever.
Payment fraud during Covid-19
In September this year we commissioned independent researchers to ask 1,110 online businesses based in the UK, US, Canada, Italy, Germany, Austria, and Bulgaria how they had been affected by Covid-19, and the trends they had seen emerge in shifting consumer behaviour within their online checkout.
Over half (55%) told us that an increased risk of fraudulent transactions has been one of their greatest concerns during the pandemic. And this is reflected among their customers; 60% of businesses believe that consumers are more concerned than ever about being a victim of fraud and 68% of businesses believe that consumers are increasingly looking to make payments online using methods where their financial details are not shared as a consequence.
This is already impacting the way consumers are paying online. 76% of online businesses said that they have already noticed a change in the way people pay, such as a greater percentage of consumers using digital wallets or eCash, and when asked why the most popular answer from businesses was that consumers are looking for a more secure method of payment.
Our previous research published in May, ‘Lost in Transaction: The impact of Covid-19 on consumer payment trends’ indicated that protection against loss from fraud (identified by 34% of consumers) and financial data being kept safe from fraudsters (identified by 32%) were the top two reasons people chose a particular payment method.
And when we asked consumers, we also discovered that overall they didn’t feel as though their online payments were secure enough. Over half (51%) said they would accept whatever security measures were required if it kept their data secure – however poor it made the user experience –and another 25% said they would accept a more inconvenient payment method than they currently use. Only 18% said the balance between security and convenience struck by payment methods was currently correct.
New online consumers are shifting the landscape
There are other reasons why payment security has topped the list of concerns this year. Covid-19 has definitely accelerated the adoption of commerce – our research showed 18% of consumers are shopping online for the first time following the pandemic, and concerns about sharing financial details with online merchants is one of the key reasons these customers have not shopped online previously. In addition, there is another group of consumers that only shopped online with a select group of businesses that they had a personal relationship with; now they are open to shopping online more they are inevitably interacting with merchants they are unfamiliar with and their willingness to share financial details has shifted accordingly.
For online businesses that want to attract and keep customers from these two groups, offering a choice of secure payment methods will be essential. At a time when customers are more valuable than ever, businesses don’t want to be running the risk of losing out on revenue by losing customers that are changing their preferred payment method due to security concerns.
