Why online businesses don’t trust their checkouts

In October we asked small and mid-sized businesses (SMBs) to tell us about how their online checkouts had evolved in the past 12 months. As has been the case in previous years, our survey revealed that SMBs still feel that they need to address and evolve elements of their payments offering to maximize its effectiveness.

In previous years, the security of online payments has dominated the priority list for businesses, with SMBs consistently telling us that they value lowering fraud rates above improving the user experience of their checkouts. And when they have been asked about the criteria that they use to select a payments partner, the ability to offer guarantees on the security of payments consistently has been the most frequent response.

However, despite the persistent focus on security and reduction of fraudulent transactions, this issue isn’t going away. In fact, many SMBs say that they are less confident in their online checkouts than they were 12 months ago.

The data

When we asked businesses to tell us about the fraud that is occurring at their online checkout, the size of the issue became clear. The vast majority of online businesses (85%) remain concerned about the level of fraud that is taking place within their checkout, and for almost a quarter (23%) of businesses this concern is so severe that it is the main priority for them related to accepting online payments. Only 5% of businesses don’t believe there are any fraudulent transactions taking place in their online checkout.

And despite this always being an issue for online businesses, for many their level of concern continues to go in the wrong direction. Half (49%) of all businesses told us that they are more concerned about the number of fraudulent transactions that are happening in their online checkout now than they were 12 months ago, compared to just 12% that are less concerned.

A third of businesses go even further. Not only are they concerned about the level of fraudulent transactions taking place in their online checkouts, but they also actively describe themselves as an easy target for fraudsters.

Why do SMBs think that?

There are a number of reasons why businesses could have these concerns:

• The belief that fraudsters are one step ahead – For many businesses, just the impression that the payments industry is always one step behind the criminals that are trying to defraud them is concerning enough.
• They are at a competitive disadvantage – For some, the concern stems from the fact that they believe they are an easier target for fraudsters than other businesses. In fact, according to our research, 33% of businesses do think that their online checkouts aren’t as secure as their competitors.
• They’re seeing their fraud rates increase – But it could also be due to personal experience. Overall, 41% of SMBs told us that they have actively seen more fraudulent transactions occurring in their checkout since the start of the COVID-19 pandemic.

 

What should businesses do to combat fraud?

Online businesses need to work more closely with the right payments partners to combat these issues. Currently only 67% of businesses feel that their current payments provider gives them all the tools they need to effectively combat fraudulent activity.

They also need to work with a payments partner to develop a strategy that will limit fraud without dramatically impacting their capabilities to accept payments. Measures to tighten payment acceptance that affect legitimate transactions and result in blanket card declines and high rates of false positives isn’t effective. Only 17% of businesses say that they would be prepared to do whatever it took to minimize fraud even if it meant reduction of revenue by declining legitimate transactions.

Next steps

Offering more secure payments methods, providing more tools to combat fraud, and reducing false positives can all be achieved by working with the right payments partner. To find out more about how Paysafe works with its clients to optimize fraud prevention, contact us today.