Are we losing App-etite for frictionless payments?
More than half (52 per cent) of online small to medium-sized businesses (SMBs) globally worry that the move to frictionless payments - such as transactions that take place behind the scenes in apps - is leaving them more open to fraud and will negatively impact revenues.
In the UK, this concern is heightened by the fact that two-thirds of SMBs believe they are being more aggressively targeted by fraudsters now, compared to a year ago and 43 per cent consider card fraud an increasing challenge.
New research from payments provider Paysafe surveyed businesses that accept card not present transactions (online merchants) and those that accept card present transactions (offline, brick-and-mortar merchants). The card not present merchants comprised 601 companies from the US, Canada, UK, Germany and Austria, while the card present data comes exclusively from 306 US and Canadian businesses.
Globally, security (59 per cent) ranks above reliability (49 per cent), cost (47 per cent) and ease of transactions, including refunds (40 per cent).
In the UK, 62 per cent of SMBs believed that longer verification processes during the payment stage - which could potentially combat these issues - runs the risk of losing consumers, with 65 per cent admitting they do not know how to balance security with an acceptable customer experience.
Abandoned transactions are also posing a problem, with nine per cent of purchases not being completed. Yet, while 28 per cent believed this reflects successful fraud checks, a third said abandoned transactions have a major impact on business performance.
When it comes to which payment options to offer, 65 per cent of UK merchants believe offering multiple choices is essential, while 79 per cent plan to introduce new payment methods in the next two years.
Credit cards and debit cards are offered by 87 and 93 per cent of online merchants respectively, while 44 per cent currently accept digital wallets, with a further 22 per cent looking to adopt them over the next 24 months.
One method with the greatest anticipated gains is mobile apps, with 32 per cent planning to offer them in the next two years, up from 18 per cent currently.
The research also revealed that 52 per cent of UK merchants agree that consumers want more innovative ways to get short-term credit, as evidenced by the recent rise of ‘pay later’ style products which give consumers more flexibility.
Oscar Nieboer, chief marketing officer at Paysafe Group, said that security concerns continue to prevail for UK online merchants, despite merchants confirming plans to adopt new payment types.
“This may go some way to explaining the rise of prepaid cards, online vouchers and cash replacement systems, which can alleviate these issues for both consumers and merchants,” he stated. “Yet, smaller e-commerce merchants are very conscious of the need to keep pace with the major retailers.
“While the giants roll out cashierless locations in the UK, online SMBs are aiming to innovate in parallel ways to punch above their weight as they see this as critical to business success.