Half of Americans resist move to ‘frictionless’ payments due to privacy and security fears; cash continues to thrive
HOUSTON, June 06, 2018 (GLOBE NEWSWIRE) -- The shift towards ‘frictionless’ payments – i.e. invisible transactions that take place ‘behind the scenes’ in apps – is being held back by American consumer concerns over security and data privacy, according to new research conducted by Paysafe. The report from the leading global payments provider uncovers some unexpected findings. For these ‘invisible’ payments, figures show:
-- 50 percent of consumers cite fraud as the biggest barrier to using them. 52 percent express concerns around the use of their data; -- Two thirds of consumers (65 percent) think voice-activated systems are not secure. 69 percent worry about being overcharged if they used this type of service; and -- 57 percent report that checkout-free stores – where smart technologies record the shopping basket and automate payments – sound too risky, or they’d need to know more before using them.
Meanwhile, other emerging payment methods are polarizing consumer opinion – 34 percent of consumers would let fridges automatically re-order food, but 50 percent don’t expect to adopt the technology in the next two to three years.
The report, called Lost in Transaction: Payment Trends 2018, is an international research study investigating consumer attitudes to new and traditional payment methods. The research incorporates consumer views from the US, UK, Canada, Germany and Austria, and draws comparisons with Paysafe’s inaugural Lost in Transaction report in 2017.
Perhaps surprisingly, cash continues to thrive as the most common form of payment: 82 percent of Americans used it in the past month to make a purchase. ATM visits remained similar – 69 percent had visited one in the last month, compared to 68 percent in 2017. Yet 55 percent of Americans carry less cash than a year ago, falling from an average of $50 last year to $42 in 2018.
In the US, just 3 percent of consumers have used contactless in the last month, in spite of the fact that 40 percent of Americans reported trying contactless in 2017. The picture is similar in Canada where 58 percent of consumers tried contactless in 2017, but only 19 percent used it in the last month. Growth in contactless was highest in the UK, where 54 percent of consumers had used it in the previous month.
However, even if people are carrying less physical cash, they are finding other ways to keep cash at the forefront in the overall mix. For example, in North America, prepaid cards are the most popular cash alternative, used by 16 percent of Americans and 18 percent of Canadians respectively; and in Austria and Germany, cash replacement systems are used by 12 percent and 9 percent of respondents respectively.
Commenting on the research, Todd Linden, CEO, Paysafe North America, said: “Although it is early in the development of contactless infrastructure in the US, it is still surprising to see that only 3 percent of Americans have used it in the last month, considering how many had tried it last year. Similar to EMV chip technology, there is a long journey to build the product out for consumers. There are more challenges to tackle with other low friction payment technologies, as these findings suggest many consumers aren’t ready to lose visibility of the payment process. It’s clear that the benefits are not unilaterally agreed upon, with cultural and infrastructure trends at play, and it may be some time before adoption is widespread. Even though the average American only carries $42 with them, it’s still the most popular method of payment and merchants need to balance their range of payment options to ensure they are plugging into consumer demand.”
The report also highlights the growth of digital wallets: 39 percent of Americans had used one for an online purchase in the past month – close to the level of use of credit (44 percent) or debit (46 percent) cards. Globally, digital wallet usage ranged from 39 percent in the US to a high of 61 percent in the UK.
But when it comes to fraud, the report highlighted a convenience versus risk paradox and a geographical split in how fraud impacts payment behavior locally:
-- 70 percent of Americans and 64 percent of Canadians believe online fraud is inevitable, but only 28 percent of Germans and 26 percent of Austrians hold the same view; -- More consumers in Germany and Austria choose to pay by invoice rather than debit card. 55 percent of Austrians and 49 percent of Germans say it feels safer.
Linden adds: “Seven out of 10 Americans are prepared to accept that fraud is an inevitable risk of shopping online. If retailers, merchants and payments companies want to disrupt the old way of doing things they must make all underlying processes feel secure. Consumers want convenience, but they want protection too. They are making sensible choices when it comes to security and are willing to change what they’ve used to ensure they’re not at risk of fraud. But that doesn’t give merchants a free pass not to enhance their protection – or else consumers may go to those that will improve their overall protection.”
To read the full report, which includes comparisons between consumer attitudes to online shopping, payment habits, cash, frictionless payments and perceptions of security and fraud in the US, UK, Canada, Germany and Austria, click here.
Additional key statistics – US
Invisible & frictionless payment usage
-- 29 percent of Americans have used frictionless payment in apps to pay for goods and services, despite the widespread awareness of services. -- Almost a quarter (24 percent) have tested a voice-activated payments system. -- 51 percent of smartwatch owners have made a payment on their device.
What’s holding Americans back from ‘invisible’ payments?
-- 34 percent are concerned systems may inadvertently buy things. -- 24 percent are worried spending may not be controlled. -- More than two fifths (41 percent) of consumers said they were already losing track of their subscription-based payments and are thus wary of adding new services such as fridge-based re-ordering.
-- 48 percent of American consumers say they are open to using a smart button to re-order frequently used items, which are typically of lower value. This suggests consumer usage of frictionless may be linked to the value of a transaction.
-- American consumers report a slight drop in the amount of fraud experienced in the past year, reporting a drop from 37 percent to 34 percent. -- Globally, 18 percent of credit card users say they have experienced fraud, 15 percent of bank card users suffered fraud on their card, and 15 percent of digital wallet users were targeted. -- Despite its prevalence, most US consumer fraud is under $100 in value and 60 percent of consumers say it was resolved within a week.
About Lost in Transaction 2018Lost in Transaction: Payment Trends 2018 is an independent research project supported by London-based agency Loudhouse in Q2 2018. It follows Paysafe’s inaugural Lost in Transaction report in 2017. The research was completed among 5,056 consumers from the US, UK, Canada, Germany and Austria. Respondents came from six different age groups and a variety of different professions.
About PaysafePaysafe is a leading global provider of end-to-end payment solutions. Its core purpose is to enable businesses and consumers to connect and transact seamlessly through industry-leading capabilities in payment processing, digital wallet and online cash solutions. Delivered through an integrated platform, Paysafe solutions are geared toward mobile-initiated transactions, real-time analytics and the convergence between brick-and-mortar and online payments. With over 20 years of online payment experience, a combined transactional volume of US $56 billion in 2017 and over 2,600 staff located in 12+ global locations. Paysafe connects businesses and consumers across 200 payment types in over 40 currencies around the world. For more information, visit www.paysafe.com.
For media enquiries, please contact Amy Gregus Head of Corporate Communications, North America, Paysafe Group Mail: email@example.com / Phone: 514-294-0247