The way consumers make payments, both online and offline, has undergone significant changes in the past few years. We summarize the key findings from the Consumer Payments Survey Report of 2023, conducted by the Merchant Fraud Journal and sponsored by Sift. We’ll explore the impact of these trends on merchants and discuss how they need to adjust their fraud prevention strategies.
Methodology:
The survey included 1,500 U.S. consumers from diverse demographics, ensuring representation across various backgrounds. The data was collected through a self-administered questionnaire, employing stratified sampling for increased accuracy and a lower margin of error.
Findings:
1. Digital Payment Adoption and Usage:
Consumers are increasingly making online payments, with 40% reporting weekly usage. The convenience and speed offered by digital payments are driving their adoption for everyday purchases, including both necessities and luxury items.
Contactless payment methods from banks and retailers are expected to fuel further growth.
2. Digital Wallet Usage Frequency:
While digital wallets like Apple Pay and Google Play are growing in popularity, they are not the preferred online payment option for most consumers.
Approximately 30% of Americans now use digital wallets on a weekly basis, primarily driven by younger generations. Security concerns and lack of awareness remain barriers to wider adoption.
3. Buy Now, Pay Later (BNPL) Adoption:
BNPL services are gaining traction, but regular consumer usage remains relatively low. Concerns about changing economic conditions, lack of regulation, and interest rates contribute to cautious consumer behavior.
4. Consumer Use of Cryptocurrency:
The adoption of cryptocurrency as a payment method is increasing, with approximately 16% of Americans having invested or traded in cryptocurrencies.
However, concerns about stability, mainstream acceptance, and crypto fraud hinder broader adoption.
5. Consumer Attitudes Towards Digital Payments:
Online payments have become the preferred method for consumers, even when shopping in physical stores. Approximately 96% of consumers complete their transactions online.
The shift to online payments has increased the risk of card-not-present (CNP) fraud, posing a significant challenge for merchants.
6. Preferred Payment Methods:
Debit and credit card transactions dominate in-store purchases, while alternative payment methods like Apple Pay and crypto have yet to gain widespread acceptance.
7. Consumer Preferences Post-COVID-19:
The pandemic has influenced payment behavior, with more consumers opting for sanitary and contactless payment methods.
The surge in online transactions has led to an increase in card-not-present fraud, highlighting the need for robust fraud prevention measures.
8. Consumer Aggressiveness Toward Chargebacks:
While some consumers abuse chargebacks for personal gain, the majority use them as a helpful safety net. Merchants face challenges in fighting first-party fraud but can benefit from updated rules and liability shifts.
9. Security:
Consumer concerns about payment security remain high, and the rising instances of payment fraud and data breaches amplify these worries.
Consumers expect merchants and issuers to safeguard their information, but they may not prioritize personal security measures.
Implications for Merchants:
- To remain competitive, merchants must adopt new digital payment methods that align with consumer preferences.
- Offering a variety of secure payment options is crucial, considering the growth of BNPL and cryptocurrency.
- Merchants need to invest in fraud prevention tools and education to provide a positive customer experience while protecting against security threats.
- And many more.