# The Effect of Rising Fraud Levels on Consumer Trust Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2017-12-16 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Fraud: Continuing to shape the payments landscape Meta Description: Learn why consumer trust is crucial for online payments, how fraud impacts trust, and what steps merchants and PSPs can take to increase trust and security. URL: https://financedigest.com/the-effect-of-rising-fraud-levels-on-consumer-trusthtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/fd161217-1-1736843138962-compressed.jpg) By **Allan Syms**, COO at MYPINPAD **Earning Consumer Trust** More than £1.7m a day was lost to financial fraud across payment cards in the UK last year. This news makes for uncomfortable reading and has inevitably had a negative impact on [consumers’ trust](https://www.financedigest.com/trusting-in-trust-marks-enhancing-consumer-trust-in-your-ecommerce-business.html "Trusting in trust marks: enhancing consumer trust in your ecommerce business ") in online banking and shopping. For [online merchants](https://www.financedigest.com/three-online-fraud-trends-beauty-and-cosmetics-merchants-should-watch-out-for.html "Three Online Fraud Trends Beauty and Cosmetics Merchants Should Watch Out For") to increase their revenue, consumers must trust that their personal and payment details are secure are all times. This means merchants, banks, payment service providers (PSPs), acquirers and issuers’ [technology must be secure](https://www.financedigest.com/how-open-source-technology-is-securing-the-future-of-financial-services.html "How open-source technology is securing the future of financial services"). If trust is damaged, it will have a serious knock on effect on the willingness of [consumers to make further purchases](https://www.financedigest.com/uk-consumers-conflicted-when-purchasing-insurance.html "UK Consumers Conflicted when Purchasing Insurance") online, reuse a website or merchant that failed them and their willingness to adopt additional online payment methods. More consumers could be making [online payments](https://www.financedigest.com/online-payment-gateway-market-to-witness-a-cagr-of-10-3.html "Online Payment Gateway Market to witness a CAGR of 10.3%") if they had a better understanding, and greater confidence, in the processes and security measures behind online transactions. **Allan Syms, COO at MYPINPAD, discusses how those involved in the payment chain must understand how to win and maintain consumer trust.** **Fraud: Continuing to shape the [payments landscape](https://www.financedigest.com/5-predictions-for-payments-landscape-in-2022-and-our-reflections-on-2021.html "5 Predictions for Payments Landscape in 2022 and our reflections on 2021")** [Recent studies](https://www.financedigest.com/silicon-capacitors-market-to-garner-us-3100-million-by-2027-at-8-cagr-recent-study-by-tmr.html "Silicon Capacitors Market to Garner US$ 3,100 million by 2027 at 8% CAGR – Recent study by TMR") show that payment card fraud in the UK reached an estimated £618m in 2016, with the global figure standing at an estimated $21.84bn. This is despite the fact banks, PSPs and issuers took steps to [reduce payment card fraud](https://www.financedigest.com/the-importance-of-a-proactive-and-collaborative-approach-to-reducing-contactless-fraud.html "THE IMPORTANCE OF A PROACTIVE AND COLLABORATIVE APPROACH TO REDUCING CONTACTLESS FRAUD") and prevented £1.38bn of fraudulent transactions globally in the same year. As a result of ongoing fraud threats and data breaches, [consumer trust is being challenged and many have a lack](https://www.financedigest.com/global-emi-shielding-market-significantly-hit-by-lack-of-consumer-demand-scenario-post-covid-19-crisis-likely-to-remain-gloom.html "Global EMI Shielding Market Significantly Hit By Lack Of Consumer Demand; Scenario Post Covid-19 Crisis Likely To Remain Gloom") of confidence in making online purchases. Security is at the forefront of consumers’ thoughts with 67 percent of respondents concerned or very concerned about [online shopping](https://www.financedigest.com/increasing-trend-of-online-shopping-to-create-new-growth-opportunities-for-stretch-sleeve-and-heat-shrink-labels-market-says-tmr.html "Increasing Trend of Online Shopping to Create New Growth Opportunities for Stretch Sleeve and Heat Shrink Labels Market, Says TMR") and banking. MYPINPAD’s [recent](https://www.financedigest.com/recent-research-waterjet-cutting-machine-consumables-market-is-expected-to-grow-at-a-cagr-of-4-8-by-2021-to-2031persistence-market-research.html "Recent Research: Waterjet Cutting Machine Consumables Market Is Expected To Grow At A CAGR Of 4.8% By 2021 to 2031:Persistence Market Research") consumer trust survey discovered that security is the priority for most consumers when it comes to online purchases. **Only 2 percent of those surveyed said that they would rather have a fast transaction over a secure one**. Our results indicate that consumers are becoming more worried about fraud. A sign that banking institutions and Payment Service Providers (PSPs) need to step up their security efforts to maintain [consumer confidence](https://www.financedigest.com/asian-shares-rise-after-consumer-confidence-boosts-nasdaq-to-record-high.html "Asian shares rise after consumer confidence boosts Nasdaq to record high"). Merchants with an online and mobile presence need to [remain vigilant and open](https://www.financedigest.com/eex-markets-to-remain-open-as-power-prices-soar-statement.html "EEX markets to remain open as power prices soar – statement") to a wider variety of suitable fraud prevention solutions. Respondents said they expect the security of online commerce to improve over the [next five years](https://www.financedigest.com/musk-says-tesla-will-launch-prototype-of-humanoid-robot-next-year.html "Musk says Tesla will launch prototype of humanoid robot next year"), and merchants must rise to these expectations. The use of both PIN and biometric based authentication was identified as the most significant step online retailers and banks could take to improve consumer trust, whilst many consumers believe the use of PIN is a strong method to authenticate and secure a transaction. **What can be done?** It is clear consumers have huge concerns about the security of their transactions, which impacts their trust in [online payments services](https://www.financedigest.com/tesco-says-online-services-back-up-after-interference-attempt.html "Tesco says online services back up after interference ‘attempt’") and as a result has affected their shopping behaviour. When asked what online retailers and PSP’s could do to improve the trust consumers have in them, **40 percent of respondents to MYPINPAD’s survey wanted to use card PIN as a means of authenticating an online transaction** (in a similar vein to that of an in-store Chip & PIN environment) and 50 percent would like the option to use a combination of card PIN and biometrics. The ability for consumers to enter their card PIN securely in to their own mobile [device to authenticate a transaction is a significant and innovative step](https://www.financedigest.com/the-repositioning-and-offloading-devices-market-to-step-up-the-innovative-digitization-ladder.html "The Repositioning and Offloading Devices Market to step up the innovative digitization ladder") in the evolution of online payments. Authentication methods must be compliant with the upcoming PSD2 regulations and meet the [European Banking](https://www.financedigest.com/u-s-european-banks-could-lose-over-5-billion-from-risky-buyout-loans.html "U.S., European banks could lose over billion from risky buyout loans") Authority (EBA) requirements for Strong Customer Authentication (SCA). Entering a PIN into a mobile device facilitates SCA by verifying the identity of a person through something you have (the consumer’s mobile phone), something you know (their card PIN number) and with an additional layer of something you are (a biometric such as a fingerprint). The EBA has made it clear that the proposed regulatory technical standards on SCA and secure communication are [key to promoting innovation and improving the security of payment services across the European](https://www.financedigest.com/white-bullets-collaboration-with-polands-sygnal-association-makes-a-significant-dent-in-ad-funded-piracy-in-this-key-european-market.html "White Bullet’s collaboration with Poland’s Sygnał Association makes a significant dent in ad-funded piracy in this key European market") Union. If compliance and implementation of scalable security systems is done correctly, PSPs, issuers, acquirers and merchants will have the [opportunity to transform the online and mobile industry](https://www.financedigest.com/plant-based-beverages-market-growth-opportunities-industry-analysis-size-share-geographic-segmentation-and-competitive-landscape-report-to-2028.html "Plant-based Beverages Market Growth Opportunities, Industry Analysis, Size, Share, Geographic Segmentation And Competitive Landscape Report To 2028") as we know it; improving the customer experience, enabling greater transaction volumes, and adding to the value of the merchant services they deliver. **What are the next steps?** Across all channels, the [industry needs appropriate and scalable security](https://www.financedigest.com/embedded-security-for-internet-of-things-market-2021-by-global-key-players-types-applications-countries-industry-size-and-forecast-to-2027.html "Embedded Security For Internet Of Things Market 2021 by Global Key Players, Types, Applications, Countries, Industry Size and Forecast to 2027") and authentication methods. The growth of mobile payments in 2017 and beyond is inevitable, with adoption tripling in Europe from 18 percent to 54 percent since 2015 [\[1\]](https://mail.google.com/mail/u/1/#m_9147946458140391702__ftn1). As the [popularity of online shopping continues to grow](https://www.financedigest.com/growing-popularity-of-horseback-riding-to-bolster-sales-of-hoof-boots-market-fact-mr-report.html "Growing Popularity of Horseback Riding to Bolster Sales of Hoof Boots Market: Fact.MR Report") so have the level of fraudulent activity, consumer authentication now has no choice but to be multi-factor, consistent and convenient. Those within the payments ecosystem [must ensure the consumer is protected](https://www.financedigest.com/must-know-facts-about-the-protection-class-rating-on-your-home.html "Must-Know Facts about the Protection Class Rating on Your Home"). Acquirers, retailers and payment [service providers all have an important role to play in educating consumers](https://www.financedigest.com/do-consumers-want-robo-advisory-services.html "DO CONSUMERS WANT ROBO-ADVISORY SERVICES?") about the benefits, security and convenience of making purchases online. This can be aided by providing [solutions which add additional layers of security](https://www.financedigest.com/securing-financial-institutions-with-the-help-of-pam-solutions.html "Securing financial institutions with the help of PAM solutions"), and are convenient across multiple devices. Secure PIN entry on smart mobile devices is ready to meet imminent regulatory [demands and can easily be deployed by traditional and new third-party payment](https://www.financedigest.com/what-is-the-eus-stance-on-russias-roubles-gas-payment-demand.html "What is the EU’s stance on Russia’s roubles gas payment demand?") providers. Due to the fact PIN is a universally accepted form of authentication, it is already a habitual behaviour for consumers when making a purchase. Entering a PIN is familiar and trusted, providing a level of security consumers are comfortable with. By combining this method with biometric capabilities, merchants would answer consumers’ demand for increased transaction security online and also incorporate the multi-factor authentication method which will be required of them under PSD2. By doing so this will provide a secure and convenient environment for consumers, bridging the gap between [payments security](https://www.financedigest.com/top-tips-for-securing-softpos-payments.html "Top tips for securing SoftPOS payments") and smooth customer experience. Overall, instilling trust back into the consumer. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---