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Consumers Seek Online Payments Security Assurances: Survey
April 6, 2016

By Kevin Woodward

As online shopping continues to grow, consumer anxiety about the security of the payment card credentials on e-commerce sites remains a top concern. Some 48% of consumers want more assurances about their online shopping security, finds a survey released Wednesday by Tender Armor.

Image Credit: Tender Armor
Madeline Aufseeser, Tender Armor chief executive.

The survey of more than 1,000 consumers, conducted for Tender Armor by Sparks Research, a Clemson, S.C.-based marketing research firm, found this desire for more reassurance bested all other statements about online purchases by a wide margin.

Such assurances may help offset changes consumers make following the identification of a fraudulent charge on a credit card statement, says Madeline Aufseeser, chief executive of Fort Lauderdale, Fla.-based Tender Armor. Fifty-four percent of respondents made some change to their spending habits following a fraud incident, ranging from closing the affected card, 16%; using the replacement card less, 13%; changing retailers, 13%; shopping less online, 10%; and not using the replacement card, 2%. Some 46% do not alter their spending patterns.

“That is a hit in the pocket book for banks and merchants,” Aufseeser tells Digital Transactions News. “It’s somewhat alarming the number of accounts that are closed, consumers using their replacement cards less, or those who change retailers.”

Tender Armor sells CvvPlus, a service that issues a dynamic card verification code directly to consumers via text, email, or online, with no changes to the credit or debit card. Tender Armor’s primary customers are card issuers and processors.

Payment card fraud causes consumers anxiety, Aufseeser says, citing the survey The possibility of more fraudulent charges on the card account or identity theft worried 24% of respondents, while 20% didn’t like waiting for the replacement card. Other concerns were the potential impact on credit scores, 14%; general sense of vulnerability, 12%; resolving the refunds, 11%; calling the bank to fix the problem, 9%; dealing with the bank in general, 6%; and continuing to use the account though the bank is aware of fraud activity, 4%.

Aware of consumer concerns about online shopping, issuers and the card networks have offered 3-D Secure, a technology that tries to thwart online fraud by requiring consumers to enter a PIN or password while in the process of checking out on merchants’ sites. Increasing online fraud rates are sparking broad new interest in 3-D Secure, even while an update is in development.

The original technology put an extra step in the checkout process, a distinction that’s the bane of online retailers. Aufseeser says her company’s service just substitutes an existing step—entering the CVV code—with another way of retrieving the code.

3-D Secure has a low adoption rate, with only 5% of online transactions evaluated through it, Aufseeser says. “The decision is based on risk criteria that then decides to use the solution or not,” she says. “That means 95% of transactions are getting evaluated based on risk criteria. That’s detection not prevention.  As well, there has been no data in the market on the fraud rates on the 95% of transactions that do not get the stepped-up requirements.”

Additionally, 3-D Secure only authenticates the transaction, not the consumer’s accounts held by merchants or the consumer herself, Aufseeser says.

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