Digital payment alternatives are diversifying rapidly, and consumers’ payment preferences are changing just as fast.
In the face of this rapid evolution, merchants are challenged with meeting customer expectations for seamless payment processing, as well as providing the right point of sale interface to accommodate emerging digital payment alternatives.
Executed well, rolling out digital payments can offer the kind of brand experience that drives customer loyalty and trust.
This can be easier said than done. Beyond providing a frictionless customer experience, merchants are tasked with addressing several concerns that come along with new digital payment options. For example, many consumers are not confident in the security of their digital transactions, which can often deter them from making a purchase. Balancing customer convenience with implementing additional security measures to alleviate these worries is one of the biggest payments challenges facing merchants today.
According to Paysafe’s Lost in Transaction report, merchant attitudes toward payment methods’ ease of use and security do not align well with consumer expectations on these fronts. To keep up with the fast-moving payments industry and avoid damaging their own bottom line, it’s time for merchants to start paying attention.
The mobile phone has become an integral part of the modern consumer’s shopping process, whether it’s for researching a product, keeping track of sales and promotions, or actually making a purchase. As we saw over the Black Friday weekend this year, consumers are relying heavily on their smartphones while shopping, and the path to purchase is becoming more complex as online and offline touchpoints intertwine.
Reliance on the mobile phone is driving consumer adoption of digital payment alternatives, including e-wallets, mobile payments and cryptocurrencies. According to the Lost in Transaction study, 83% of respondents said they agree that mobile wallets are more convenient than cash, and 79% believe mobile wallets are more convenient than contactless payments. Since payment methods like Apple Pay or Android Pay and mobile wallets align with the ways consumers like to shop, consumers are beginning to favor these payment methods.
Consumers’ patience is short when they are faced with more complicated or tedious payments requirements, such as hidden fees, or only one payment option to complete the transaction, leading them to take their business elsewhere.
In fact, the Lost in Transaction study found that 67% of people have abandoned an online shopping cart in the last month, which is why many businesses are focused on perfecting the customer experience by making it as easy as possible to complete a purchase.
But, is the effortless buying experience really consumers’ main concern in digital shopping?
Although data from the Lost in Transaction report shows 71% of merchants acknowledge fraud as a serious problem, the research also found that 36% of merchants fear that introducing more robust security would drive customers away. This shows that many merchants are putting convenience before security in payments and, as a result, they are likely missing out on business opportunities.
Paysafe’s Lost in Transaction report found that 58% of consumers want tougher fraud prevention measures, even if it makes payment less convenient. Merchants who focus on putting convenience ahead of security are out of touch with what consumers are actually looking for when online shopping or making a digital payment.
From the merchant perspective, they do deserve credit for looking to eliminate fraud from traditional payment methods, as 60% of merchants believe credit cards are more susceptible to fraud than other modes of payment, according to the Lost in Transaction study. While this may be true, consumers are more worried about the unknown that comes with new digital payments alternatives and need some reassurance during the payment process to ensure further adoption of these new methods.
Customers are hyperaware of fraud and security risks, as 49% of Americans believe fraud is an inevitable part of online shopping and 81% of respondents to the Lost in Transaction study said they avoid making transactions over unsecure or public Wi-Fi networks. Of course, this doesn’t mean that convenience should be ignored, but merchants need to reevaluate their views of consumer preferences and expectations when it comes to digital payments.
While convenience is driving consumers to use more emerging digital payments methods, it does not ensure customer loyalty and keep them shopping at your business if they feel they are at risk for fraud. Merchants must acknowledge the significance of both convenience and security in digital payments, and, most important, recognize where their customers’ priorities lie.
Ultimately, trust makes more sales than ease of check out when it comes to online shopping. Digital payments are still new to many consumers and often store a lot of personal information that they are nervous about having hacked. As a result, merchants have a big responsibility to keep customers safe, while still accommodating their evolving payment preferences.
Merchants need to take a step back and look at which digital payment alternatives present risks to consumers and respond by implementing the appropriate security measures. For example, 56 percent of consumers are happy to accept whatever measures it takes to eliminate fraud, including tools like two-step authentication. Savvy merchants realize that providing that extra level of fundamental fraud protection helps build trust, which is the key to long term success and loyalty with customers who prefer digital payments.
By assessing risk, making informed choices and investing in building trust with consumers, online merchants will thrive in an industry based on digital payments.