Online banking businessman using smartphone with credit card Fintech and Blockchain concept

Security vs convenience: finding the right balance for online payments

Online banking businessman using smartphone with credit card Fintech and Blockchain concept

Article by Megan Oxman is the SVP of New Product Development, Digital Wallets at Paysafe

Our research shows security reigns as the number-one priority for customers shopping online but convenience doesn’t lag far behind, and poor user experience is simply unacceptable.

The eCommerce explosion we’ve seen in recent years has seen more and more commerce moving online, creating a careful balancing-act between security and convenience.

Customers, who are increasingly aware and worried about the risks of fraud when sharing financial details online, also expect online shopping to be quick and easy. But greater security typically introduces friction into the checkout process, which in turn becomes one of the leading causes of cart abandonment.

In our latest Lost In Transaction report, we surveyed 11,000 consumers in 10 countries across Europe and the Americas regarding their thoughts about the balance between security and convenience in online payments.

Here's what we found, and what this means for online merchants.

How concerned are consumers about online fraud?

Our research shows that worries about online fraud continue to increase with 59% of respondents more concerned about it today than a year ago. More to the point, feeling uneasy about sharing financial details online has increased from 49% in 2021 to 70% in 2022.

This sentiment is echoed by our research showing that, given a choice, 44% of respondents will invariably pay with the method they feel is safest. By contrast, only 21% will choose the most convenient payment method, and even fewer (14%) will choose the fastest one.

These findings aren't surprising in light of fraud having become more frequent and more serious during the COVID-19 pandemic with the average US fraud victim losing $500 and the average UK victim losing £806 in 2021.

However, while 42% of customers would prefer more payment security, there’s a limit to how much friction customers are prepared to tolerate. Only 19% are open to whatever measures are necessary while the remaining 23% clearly limit how much extra inconvenience they are prepared to accept.

Striking the right balance

Currently, trust is high with 53% thinking online payments are more secure than they were twelve months ago. Furthermore, 44% of consumers (compared to 26% in 2021) think merchants are getting the balance between security and convenience right and 64% of respondents are more likely to shop from merchants who already have their payment details on file, compared to 54% in 2021.

However, cybercriminals are constantly refining their techniques and regulation continues to evolve. That means that security measures have to be continuously evaluated and adapted with little margin for error as tolerance for friction decreases and demand for a good user experience increases.

This is where payment technology comes into play. Alternative payment solutions can enable the right balance.

Embedded payments, for instance, allows consumers to pay through a user-friendly interface. Financial details are stored securely in a tokenised format and can be used at the point and time of need without having to input them with every purchase.

eCash is another example for a convenient and secure online payment solution.

Upon completion of an online financial transaction, the customer receives a unique barcode which can be scanned at one of one million points of sale in 55+ countries to settle the payment in cash without the need to store or share any financial details.

Despite the remaining knowledge gap with regards to these alternative payment solutions, our research shows that consumers are becoming more open to both technologies. So now is the time for merchants to take advantage of the high levels of trust they enjoy, explain the benefits clearly to customers and, more importantly, address concerns.

Security is the top priority, but not at all costs

Keeping financial details safe is the most important element of the payment process for most customers. But while security has won the battle against convenience in online payments, consumers are not willing to jump through endless hoops or accept poor user experience as the inevitable price of greater security.

Hence, a zero-fraud strategy, as appealing as it might sound on paper, is not the answer to striking the right balance as it would likely cause way more friction than most customers are prepared to tolerate. As critical as it is for merchants to protect customers’ data — and to recognised for doing so — a smooth, seamless payment experience remains as important as ever.

About the author

Megan OxmanMegan has an international track record of driving growth and innovation for some of the world’s biggest consumer brands. She spent eight years as part of Amazon’s payments team, where she was responsible for launching and operating multiple new consumer payments products. Prior to Amazon, Megan worked at the Bill & Melinda Gates Foundation where she worked with organisations to improve accessibility and use of financial services across the globe.

Megan joined Paysafe in March 2022 to oversee the company’s consumer-facing products in Europe and the US, including the Skrill, NETELLER and paysafecard solutions.