Report: Consumers take new measures to ward off online fraud

Online payment security is a top concern for merchants and consumers — but shoppers are leading the charge when it comes to protection.



A sobering 70% of U.S. merchants experienced an increase in sales through online and mobile channels over the previous year, and 42% of shoppers have abandoned an online purchase due to payment security concerns,” according to the “2016 American Express Digital Payments Security Survey,” from American Express. The report, which is based on responses from 1,021 U.S. consumers and 401 merchants, reveals that as e-commerce grows, payment security remains top of mind for both.



For example, nearly half (48%) of consumers who shopped online in the past year have experienced payment fraud, representing nearly 80 million online consumers. Four in 10 consumers (40%) view online shopping as having more risk than an in-store purchase (28%). Meanwhile, 60% of merchants reported that they have experienced fraudulent online sales, the report said.



Specifically, 25% of companies said their level of fraud with online sales has increased this year, and on average 31% of their online sales transactions in the past year were abandoned by their customers before a sale was completed — which is even higher than reported by consumers, the report revealed.



Unwilling to become a victim of online fraud, consumers are taking specific steps to enhance the security of their information when making an online purchase. Interestingly, their efforts tend to outpace retailers’ initiatives.



For example, nearly eight-in-10 online consumers (78%) are willing to enter a security code (CVV) for their credit card, but only 57% of merchants require the use of a CVV code for online customer transactions. With 70% of online consumers prepared to use security questions (such as ‘What was the make and model of your first car?’), 43% of merchants now have this prompt available on their websites, data revealed.



More than two-thirds of online consumers (68%) are willing to create a one-time password, but only 37% of merchants require this safeguard as additional security. Meanwhile, 63% of online consumers are open to creating a customer profile on the merchant’s website in order to complete a purchase, but less than half of merchants (46%) provide this option online, the report said.



“Payment fraud can impact a merchant’s bottom line,” said Mike Matan, VP, industry engagement, product and marketing for American Express’ global network business. As a result, retailers that take a cue from consumers and add more security measures have the opportunity to capture more online sales and increase trust among their customers, a company statement said.