Worries About Payment Card Fraud Mounting Among US Consumers
August 22, 2016
(New York, NY): US consumers worry about payment card fraud, with over half saying it’s increased in the past year. And it’s not an idle fear—42% have personally experienced card fraud, half of them multiple times. But almost all report a satisfactory resolution by their bank, according to recent research from Auriemma Consulting Group (ACG). The recent survey of 500 debit cardholders found that many consumers are fatalist about the chances of it happening again: 46% think it’s likely that they’ll experience card fraud in the next five years.
Consumers are skeptical about the efficacy of security solutions in the market. While most consider chip cards to be more secure than the traditional mag stripe, only 32% think that the introduction of chip cards has decreased the level of card fraud, while the majority (58%), say that EMV has had no impact.
Despite these doubts, cardholders express willingness to use stronger authentication methods. Only 38% say they’ve encountered two-step authentication, but the great majority agree that there are some sites where they’d prefer this safety measure. 70% say they’d enable two-step authentication for their online account if it were offered by their primary bank.
Their willingness to go through a more time-consuming process varies by the size of the transaction, however. When asked about a hypothetical $100 purchase, 85% agreed that security is more important than speed. In the case of a $5 purchase, however, that drops to 70%, with 30% who want that transaction to be fast, ‘even if it means fewer security steps’. “The importance of security seems to fluctuate according to purchase amount,” said Jaclyn Holmes, the senior manager who directed the study. “In reality, the amount of the purchase has nothing to do with a fraudster’s ability to steal a consumer’s information, but consumers tend to care more about speed than security for smaller transactions.”
And despite their concern with security, Americans confess to taking time-saving shortcuts. More than two-thirds save passwords on their devices for at least some of their accounts, most commonly email and social media. Not surprisingly, the lure of convenience increases with the amount of online activity: 30% of those who shop online weekly say they save the password for nearly all their accounts, double the proportion of less frequent shoppers.
One of the most popular ways to save time online is by using one-click checkouts, and Amazon’s 1-Click and PayPal’s One Touch, the two most popular, both have high levels of satisfaction. But non-users fear that this convenience comes at a price. While almost two-thirds of all respondents thinks one-click makes the payment process more enjoyable, virtually the same percentage say it will make online shopping more vulnerable to fraud. “Many cardholders are uneasy with the idea of being permanently logged on,” Holmes notes. “Consumers appreciate the convenience of being able to breeze through online check-out with a single click, but it may be leading some to wonder whether that same convenience could make them a tempting target for fraud.”
The idea that extra security takes extra time makes sense to these consumers: their new, more secure chip card transactions take longer, and they want two-step sign-ins on their most sensitive accounts. “This mind-set may make it harder for mobile payments to gain mass acceptance”, says Marianne Berry, Managing Director of Payment Insights at ACG. When asked to choose the most secure payment method, 42% of survey respondents chose chip cards, three times the number that chose mobile. “Most early adopters of mobile payments have some understanding of the concept of tokenization and view it as a very secure way to pay,” Berry noted. “But in the general population, mobile’s speed and convenience can equate to being less safe. To convert non-users, marketing messages should highlight how mobile pay transactions mask the payment card information. Consumers need to hear that it’s just as safe as a chip card transaction, but faster—and a lot more fun.”
The study was conducted online among 500 debit card users in May 2016. Respondents were recruited from Instantly’s web panel, and fieldwork was conducted by Issues and Answers. The purpose of the research was not disclosed nor did respondents know the criteria for qualifying. The average interview length was 20 minutes.
About Auriemma Consulting Group
ACG is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines. Founded in 1984, ACG has grown from a one-man shop to a nearly 50-person firm with offices in New York and London. For more information, visit ACG’s website at www.acg.net or contact Marianne Berry at Marianne.Berry@acg.net.