There is an undeniable convenience that comes with shopping online - a few clicks of a button and a parcel arrives at your doorstep the next day. The ability to be able to shop 24/7 saves customer’s time and money, which online merchants can capitalise on and encourage spending by sending discounts direct to customers. However, while shopping online is arguably easier for consumers rather than facing busy in-store queues, fears over the safety of purchasing goods online continue to rise.
Research by the Centre for International Governance Innovation (CIGI) revealed that 52% of online shoppers are concerned about their online privacy and 81% say cybercriminals are the primary source of this concern . As a result, consumers are becoming more security conscious when it comes to shopping online, meaning online retailers cannot afford to rest on their laurels and ignore consumer demand for enhanced safety. However, merchants are faced with the challenge of responding to customer demand and maintaining a security safe environment, while fighting to attract loyal customers and keep up with the competition.
The reality is customers believe that they should be able to buy what they want, when they want and how they want. In-fact, PPRO research has revealed that 90% of UK consumers admit that they expect several payment method options. 67% of UK customers have also admitted that they have abandoned an online shopping basket simply because they didn’t trust the payment method on offer. Merchants want and need to attract new customers, so they must make it easy for consumers to buy their goods online, by offering the right payment mix and minimising the risk factor to ensure consumer trust.
Essentially, customers only feel secure online when they recognise the payment methods that are on offer to them. If not, customers will abandon their shopping experience if they feel that the payment method, or indeed the payment process, is not secure. Online retailers are currently on a slippery slope to security and are struggling to find a balance between providing recognisable payment methods, a seamless shopping experience while adhering to the needs of their range of customers from around the world.
With 39% of UK consumers shopping online on a weekly basis and a further 19% revealing that they shop online more than three times a week, it is essential that consumers feel secure when they do so, to encourage spending. Merchants must tread carefully when choosing which payment methods to offer to their customers, because if a customers’ confidence is lost, merchants will ultimately lose out to competitors.
In recognition of the threat merchants face when it comes to balancing security with usability and customer loyalty, the financial industry has begun to respond to consumer protection concerns within the EU payment landscape by introducing Secure Customer Authentication (SCA) legislation under the second Payment Service Directive (PSD2) on 14th September 2019.
The aim is to revolutionise the payments industry, from influencing the way we pay online, to the information we see when making that payment. To comply, qualifying transactions will need to be authenticated using two out of three forms of authentication in order to be approved. The factors include: something the consumer knows (PIN or Password), something the consumer has (device or credit card) and something the consumer is physically (biometric).
Merchants aren’t directly responsible for meeting the SCA requirements, as the responsibility falls on acquirers and issuers in the European Economic Area (EEA), including all 28-member countries of the European Union (EU) plus Norway, Iceland and Liechtenstein. However, it is in merchants’ best interest to incorporate compliant methods into their payment offering, as failure to do so could see an impact to their authorisation rates on some transactions. Security and trust are two paramount factors and will be able to coexist with convenience. Payments should become as transparent as possible.
No matter which way you look at it, merchants are fundamentally struggling to get the balance right between customer experience and customer security. With commerce moving towards a customer centric model, preserving customer trust by providing a seamless checkout process with safe and secure payment methods becomes key and are the ways that business can increase customer loyalty without the fear of losing out to their competitors.