50% of UK consumers resist move to ‘frictionless’ payments due to privacy and security fears

The shift towards ‘frictionless’ payments (ie invisible transactions that take place ‘behind the scenes’ in apps) is being held back by UK consumer concerns over security and data privacy. That’s according to new research conducted by Paysafe.

The report from the global payments provider uncovers some unexpected findings. For these ‘invisible’ payments, figures show that 52% of UK consumers cite fraud as the biggest barrier to using them. 43% express concerns around the use of their data. Two-thirds of British consumers (67%) think that voice-activated systems are not secure.

Also, 69% worry about being overcharged if they used this type of service and 59% report that checkout-free stores – where smart technologies record the shopping basket and automate payments – sound too risky or that they would need to know more before using them.

Meanwhile, other emerging payment methods are polarising consumer opinion. 39% of the UK public would let fridges automatically re-order food, but 43% don’t expect to adopt the technology in the next two-to-three years.

The report, entitled ‘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, the US, Canada, Germany and Austria and draws comparisons with Paysafe’s inaugural ‘Lost in Transaction’ report from 2017.

Cash continues to thrive

Perhaps surprisingly, cash continues to thrive as the most common form of payment: 88% of consumers used it in the past month to make a purchase. ATM visits were up too – 89% had visited one in the last month compared to 84% in 2017. Yet, as contactless has expanded, 62% of UK consumers carry less cash than a year ago, falling from an average of £33 last year to £21 in 2018.

Contactless has continued to grow rapidly in the UK, where 54% of consumers had used it in the previous month. That’s in stark contrast to the US at just 3%, in spite of the fact that 40% of Americans reported trying contactless in 2017. In Canada, 58% of consumers tried contactless in 2017, but only 19% used it in the last month.

However, even if people are carrying less physical cash, they’re finding other ways to keep cash at the forefront in the overall mix. While the UK has the highest adoption of contactless, in Austria and Germany, cash replacement systems are being used by 12% and 9% of respondents respectively. In North America, pre-paid cards are the most popular cash alternative, being used by 18% of Canadians and 16% of Americans respectively.

Visibility of payment

Commenting on the research, Oscar Nieboer (chief marketing officer at the Paysafe Group) said: “Despite the apparent benefits of low-friction payment technologies, these findings suggest many consumers are not 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. It may be some time before adoption is widespread. In the meantime, there’s a need to continue serving the cash consumer, as well as providing options for contactless payments as the UK is so advanced in this area of payments compared to other countries.”

The report also highlights the growth of digital wallets: 61% of UK respondents had used one for an online purchase in the past month – more than either credit or debit cards. Digital wallet usage averaged 50% globally and ranged from 39% in the US to a high of 61% here in the UK.

When it comes to fraud, the report highlights a convenience versus risk paradox and a geographical split in how fraud impacts payment behaviour locally. 65% of Britons and 70% of Americans believe that online fraud is inevitable, but only 28% of Germans and 26% of Austrians hold the same view. More consumers in Germany and Austria choose to pay by invoice rather than debit card. 55% of Austrians and 49% of Germans say it feels safer.

Nieboer added: “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. For instance, nearly four-in-five Britons prioritise the use of a website that already has their payment details. This is the highest among the countries surveyed in the report.”

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.

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