Why don't shoppers trust voice-activated payments?
Over 100 million consumers worldwide have some from of Smart Home technology, but most feel reluctant to use it to make purchases. Why is that, and what can be done about it?
At Money 20/20 Europe Amazon Pay VP Patrick Gauthier spoke to a packed Main Stage audience on the subject of the growing consumer demand for being able to make payments ‘in the moment’ i.e. wanting a frictionless eCommerce experience that enables consumers to immediately make a payment as soon as they decide to purchase a product or service, without additional steps in the process.
In Gauthier’s opinion, only voice-activated platforms such as Smart Home devices, and Internet-of-Things enabled devices such as Smart Fridges and Smart Television, currently offer this experience.
The convenience benefits of making common transactions such as re-ordering groceries when they are close to running out, or purchasing a film via download, in this way are obvious. If you see that you are running low on an item you use on a regular basis, replacing the item immediately without having to spend any time travelling to a store or finding and paying for the item online is the quickest and most simple way to shop.
This opinion is supported by our research report Lost in Transaction: The end of risk? We asked 6,000 consumers from the UK, US, Canada, Germany, Austria, and Bulgaria, about their attitudes to making purchases using voice-activated technology, and the majority (53%) agreed that this was more convenient that traditional eCommerce.
An issue of trust
However, as with all digital payments, the convenience of voice-activated purchasing only tells half the story. And whilst the potential benefits of voice-activated payments are being recognised by shoppers, there is a significant trust issue when it comes to using Smart Home technology for eCommerce.
And our research indicates that consumers will not compromise the security of their financial data regardless of the convenience benefits; this is a significant hurdle to voice-activated payment adoption.
Only 37% of consumers feel that their financial data is as secure when they make a payment using a Smart Home device as when they do the same on traditional eCommerce platforms, and this is causing significant drag on the appetite for making payments via voice-activated technology. Only 42% of consumers said that they currently felt comfortable with the concept of shopping using Smart Home technology; in Germany and Austria, where consumers are traditionally more cautious about how and where they share their financial details online, this falls to 36%.
Ordering low-value items is ok, but shopping for high-value items isn’t
A further takeaway of Lost in Transaction: The end of risk? is that currently there are very distinct appetites for ‘ordering’ from merchants that they buy from regularly, and ‘shopping’ with a merchant to whom they may be making a one-off payment.
More consumers are happy to order lunch (35%) or their groceries (31%) using a voice-activated eCommerce platform, but significantly fewer are prepared to buy items from a less familiar supplier such as Christmas or birthday gifts (22%) or furniture (17%).
The value of a transaction also appears to have a significant impact on consumer behaviour. For example, only 18% of consumers are currently prepared to book a holiday or pay for a flight, traditionally two high-value purchases, using their Smart Home device.
Again this appears to show that trust issues are hampering a full embracing of voice-activated payments.
The role of PSPs in boosting consumer confidence
The attitudes of consumers when it comes to making voice-activated payments must be placed in the context that card-not-present (CNP) fraud now accounts for the majority of card fraud globally, and the percentage of global fraud that is CNP is increasing. For example, in the UK CNP fraud accounted for 76% of all card fraud losses, up from 61% in 2009. In 2018 the value of CNP fraud in the UK was £506m, a 24% increase on the previous 12 months.
So consumers are rightly concerned about the security of online payments, and for two decades have been told that passwords represent the strongest line of defence in keeping their financial data safe. But new technology is enabling biometric payment authentication, which is not only a more convenient checkout experience, it also upgrades authentication security over current password-centric practices, particularly as one element in a multi-factor authentication process.
However, consumers remain unaware of these security benefits, and in fact believe technology such as voice recognition and fingerprint scanning is less secure than the password systems that they have been relying on.
Payment services providers (PSPs) must take the lead in educating consumers and businesses about the beneficial role biometrics should be playing in the digital payments ecosystem of the future, in order to grow consumer confidence and enable a new frontier to be opened in the world of eCommerce.
To find out more about consumer attitudes to voice-activated payments, and the future of biometrics in card-not-present payment authentication, Lost in Transaction: The end of risk? is available to download now.