As e-commerce continues to expand, online payment security is a top concern for merchants1 and consumers2, according to a new report from American Express. The 2016 American Express Digital Payments Security Survey found that 70% of U.S. merchants are experiencing an increase in sales through online and mobile channels over the previous year.
The report, which surveyed 1,021 U.S. consumers and 401 merchants, reveals that as ecommerce grows, payment security remains top of mind for both. Nearly half (48%) of consumers who shopped online in the past year have experienced payment fraud, representing nearly 80 million online consumers. Four in 10 consumers (40%) view online shopping as having more risk than an in-store purchase (28%). In addition, 42% of shoppers say that they have abandoned an online purchase due to payment security concerns. This increases to 48% for Gen X and 50% for Millennials, suggesting that while younger consumers are considered early adopters of new technology, they also place a high priority on the security of their information.
Meanwhile, 60% of merchants report that they have experienced fraudulent online sales, and 25% say their level of fraud with online sales has increased this year. Participating merchants reported on average 31% of their online sales transactions in the past year were abandoned by their customers before a sale was completed.
The good news is that consumers indicate they are willing to take specific steps to enhance the security of their information when making an online purchase, presenting an opportunity for merchants to capture more online sales and increase trust among their customers.
- Nearly eight-in-10 online consumers (78%) are willing to enter a security code (CVV) for their credit card but only 57% of merchants require the use of a CVV code for online customer transactions.
- While 70% of online consumers are prepared to use security questions (e.g. ‘What was the make and model of your first car?’), 43% of merchants have this prompt available on their websites.
- More than two-thirds of online consumers (68%) are willing to create a one-time password but only 37% of merchants require a separate one-time password for additional security.
- 63% of online consumers are open to creating a customer profile on the merchant’s website in order to complete a purchase, but less than half of merchants (46%) provide this option online.
- For consumers to trust an online merchant, 84% want easy-to-find customer service contact information and 78% want visible security cues on the merchant’s site. Yet, only 50% of merchants say they provide easy access to customer service reps on their websites and 52% report taking the step of using data encryption on their website.
Consumers also can do more to keep their personal information secure online. Less than half (44%) use a different password for every online account; 30% change their passwords once or twice a year; and 17% never change their banking or payment passwords. American Express recommends Card Members create different passwords across all banking, email and social media accounts and consider updating all passwords every six to 12 months.
“Payment fraud can impact a merchant’s bottom line,” said Mike Matan, Vice President, Industry Engagement, Product and Marketing for American Express’ Global Network Business. “Fighting fraud for our Card Members and merchants is an ongoing priority at American Express. We offer a number of services and features to help Card Members monitor their account information and help prevent fraud at the point of sale, including one-click alerts to confirm charges via text, email and our mobile app. Our investments in technology and advanced analytics have also enabled American Express to achieve the lowest fraud rates in the industry.”
American Express works with merchants to fight online fraud on multiple fronts, including:
- SafeKey®: To further enable U.S. merchants to reduce online fraud, American Express recently expanded availability of SafeKey, an authentication tool that adds an extra layer of security when a participating American Express Card Member shops online. Leveraging the global industry standard, 3-D Secure®, SafeKey detects and reduces online fraud by validating the Card Member’s identity through various methods, including risk-based authentication and dynamic one-time passcodes.
- Enhanced Authorization: American Express’ Enhanced Authorization service uses additional information submitted by online merchants, such as email addresses, phone numbers, and shipping addresses, to detect fraud when a Card Member transaction is submitted for authorization. The service can help online merchants reduce operating expenses stemming from chargebacks and capture more online sales.
- Accertify: A subsidiary of American Express, Accertify provides fraud-management and chargeback solutions to online merchants that help them detect and prevent fraud across all payment card networks. Many of Accertify’s clients have quickly achieved significant gains in the efficiency, accuracy and productivity of their fraud-prevention efforts, resulting in reductions in their fraud losses and customer complaints related to fraud.
The 2016 American Express Digital Payments Security Survey was conducted among U.S. consumers and merchants that offer online/mobile payment options to their customers. The anonymous survey was conducted online September 6-13, 2016.
Unless otherwise noted, responses among consumers represent those who have made an online purchase three or more times in the past 12 months based on self-report. The sample size of n=718 has a margin of error of +/- 3.7 at the 95% confidence level. The consumer portion of the study is based on an overall sample of 1,021 respondents weighted to be representative of the U.S. census based upon gender, age, education, race and region.
The merchant portion of the study is based on a sample of 401 merchants in the U.S. Respondents have responsibility for making decisions regarding customer payment options, IT/data security, or online sales strategy and planning. The business sample has a margin of error of +/- 4.9 at the 95% confidence level.
About American Express
American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at americanexpress.com and connect with us on facebook.com/americanexpress, foursquare.com/americanexpress, linkedin.com/company/american-express, twitter.com/americanexpress, and youtube.com/americanexpress.
Key links to products, services and corporate responsibility information: charge and credit cards, business credit cards, Plenti rewards program, travel services, gift cards, prepaid cards, merchant services, corporate card, business travel and corporate responsibility.
(2)Consumers refer to those who have shopped online three or more times in the past year