Half of consumers resist move to ‘frictionless’ payments due to privacy and security fears; cash continues to thrive
Jun 06, 2018
Paysafe launches new global research into consumer payment trends
LONDON, 6 June, 2018 – The shift towards ‘frictionless’ payments – i.e. invisible transactions that take place ‘behind the scenes’ in apps – is being held back by 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. 48 percent express concerns around the use of their data;
- Two thirds of consumers (65 percent) think voice-activated systems are not secure. 63 percent worry about being overcharged if they used this type of service; and
- 56 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 polarising consumer opinion – 33 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 UK, US, 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: 87 percent of consumers used it in the past month to make a purchase. ATM visits were up too – 83 percent had visited one in the last month compared to 75 percent in 2017. Yet, 49 percent of consumers carry less cash than a year ago. This is particularly apparent in countries with high contactless adoption such as the UK, where 62 percent carry less cash, falling from an average of £33 last year to £21 in 2018.
Contactless has continued to grow rapidly in the UK, where 54 percent of consumers had used it in the previous month. That’s in stark contrast to the US at just 3 percent, in spite of the fact that 40 percent of Americans reported trying contactless in 2017. In Canada, 58 percent of consumers tried contactless in 2017 but only 19 percent used it in the last 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 Austria and Germany, cash replacement systems are used by 12 percent and 9 percent of respondents respectively; and in North America, prepaid cards are the most popular cash alternative, used by 18 percent of Canadians and 16 percent of Americans respectively.
Commenting on the research, Oscar Nieboer, Chief Marketing Officer, Paysafe Group, said: “Despite the apparent benefits of low-friction payment technologies, 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. In the meantime, there’s a need to continue servicing the cash consumer.”
The report also highlights the growth of digital wallets: 50 percent of respondents had used one for an online purchase in the past month – more than either credit or debit cards. 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 behaviour locally:
- 70 percent of Americans and 65 percent of Britons 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.
Nieboer adds: “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’re used to ensure they’re not at risk of fraud.”
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.
To read the UK Lost in Transaction 2018 release, please click here.
To read the US Lost in Transaction 2018 release, please click here.
To read the Canada Lost in Transaction 2018 release, please click here.
Additional key statistics
Invisible & frictionless payment usage
- Only 23 percent have used frictionless payment in apps to pay for goods and services, despite the widespread awareness of services.
- Almost a fifth (18 percent) have tested a voiceactivated payments system.
- 48 percent of smartwatch owners have made a payment on their device.
What’s holding people back from ‘invisible’ payments?
- 28 percent are concerned systems may inadvertently buy things.
- 31 percent are worried spending may not be controlled.
- More than a third (37 percent) of consumers said they were already losing track of their subscriptionbased payments and are thus wary of adding new services such as fridge-based re-ordering.
- 43 percent of consumers say they are open to using a smart button to reorder frequently used items, which are typically of lower value. This suggests consumer usage of frictionless may be linked to the value of a transaction.
- Of contactless users, 74 percent of both Canadians and Britons say contactless has become convenient to the point at which they don’t require physical cash, with 46 percent and 51 percent respectively wanting the contactless limit raised.
- Consumers in the UK and Canada both experienced increases in the amount of fraud in the past year, with Canadians reporting a jump from 22 percent to 29 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 fraud is under $100 in value and 60 percent of consumers say it was resolved within a week.
About Lost in Transaction 2018
Lost 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.
Paysafe 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:
Head of Corporate Communications, Paysafe Group
E: Anna.Howard@paysafe.com M: +447585 967772