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Consumer confidence slipping in online transactions

Digital payments would gain appeal with stronger security

Consumer confidence slipping in online transactions

Consumers have started to lose confidence in the security around online financial transactions, according to the 2014 Consumer Security Risks Survey, by Kaspersky Lab and B2B International.

Survey results showed 49% of participants worldwide felt vulnerable while shopping online or making online transactions, and 42% would use online payment systems more often if they felt they were protected from cyber fraud.

In addition, 62% of users fear financial fraud on the internet.

Scared in cyberspace

The data uncovered numerous examples of consumer uneasiness. For example, 40% of those who make payments online feel that the official mobile applications offered by financial companies require more security protection.

In addition, 37% of users report terminating a financial operation in the middle of the process because they were unsure about the security of the transaction.

The level of protection against cyber fraud is an important factor for consumers when choosing an e-store or a financial service operator: 60% of respondents said they would prefer companies that offer additional security measures to protect financial data.

Moreover, 75% of those surveyed expect banks, online payment systems, and online stores to protect their computers and mobile devices from financial fraud.

Need for self-protection recognized

At the same time, many users are aware that they need to implement their own security measures in addition to the protections offered by their payment providers.

While 20% of users place full responsibility for the security of financial transactions on the banks and 15% believe they themselves are solely responsible, the majority (60%) of those surveyed think that both users and banks should be responsible for the protection of financial information. This suggests that users would be eager to accept new tools from their financial organizations to help manage their shared responsibility of preventing online fraud.

“Many users still feel safer paying cash or using their bank card at a physical point-of-sale, rather than purchasing online with their computer or mobile device, and this reluctance hampers the development of the online payment market,” says Ross Hogan, global head of the Fraud Prevention Division at Kaspersky Lab.

To encourage consumers to use electronic payment services more actively, banks, online stores, and e-pay systems need to reassure users that they are safe from cyber fraudsters, Hogan said.

One way to do so, according to Hogan, is for payment service providers to offer extra security layers that are designed specifically to protect banking transactions and payments made online or from mobile devices against financial fraud.

“The presence of these additional transaction-focused protections gives users immediate and visible reassurance that their money will be secure,” said Hogan.

John Ginovsky

John Ginovsky is a contributing editor of Banking Exchange and editor of the publication’s Tech Exchange e-newsletter. For more than two decades he’s written about the commercial banking industry, specializing in its technological side and how it relates to the actual business of banking. In addition to his weekly blogs—"Making Sense of It All"—he contributes fresh, original stories to each Tech Exchange issue based on personal interviews or exclusive contributed pieces. He previously was senior editor for Community Banker magazine (which merged into ABA Banking Journal) and for ABA Banking Journal and was managing editor and staff reporter for ABA’s Bankers News. Email him at [email protected]

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The U.S. has come a long way in its journey to real-time payments, with TCH and Zelle in market and FedNow just around the corner. COVID-19 has accelerated that demand to move to real-time. Yet many financial institutions remain unconvinced of the need to move, with less than 3% of financial institutions signed up today.

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