COMMENTARY: Most Consumers Demand Stronger Fraud Protection. Are You Ready?

A recent NMI survey of 1,000 U.S. adults found that 71% of consumers want stronger fraud and security protection in 2025. Their top concerns when making payments? Data breaches (64%) and lack of control over how personal data is used (50%).

This isn’t surprising. American consumers are more aware than ever of the rapid rise in fraud and cyber threats. As bad actors become increasingly sophisticated, shoppers are prioritizing privacy and security more than ever. Small and medium-size businesses must adapt to meet these shifting expectations. And they can—by leveraging advanced authentication, tokenization, and AI-driven fraud-prevention technologies.

There are many ways to make a payment, but one is quickly becoming a consumer favorite: digital wallets like Apple Pay and Google Pay. In 2025, NMI finds that 52% of Americans expect to use digital wallets for half or more of their transactions, rising to 72% for Millennials and 79% for Gen Z.

The appeal? Pure convenience—these transactions are frictionless and feel like they didn’t even happen, especially when consumers use their thumb or face to authenticate. More consumers are also embracing voice recognition for shopping, using assistants like Alexa—so much so that global purchases made through voice assistants are projected to reach $164 billion in 2025.

Biometric authentication, like facial and fingerprint recognition, along with voice recognition, is harder for cybercriminals to replicate and far more secure than passwords or manually entering credit card details. As a result, biometrics and voice recognition are playing a larger role in authentication. While these technologies are more common among big-box retailers, it’s critical that small and medium-size businesses follow suit.

However, no payment method is entirely risk-free. Some consumers remain hesitant, and rightfully so. While less common than credit card or password theft, the idea of cybercriminals stealing faces and fingerprints sounds like something out of a sci-fi horror movie. To thwart these concerns, merchants using these technologies must ensure their software securely stores data and strengthens privacy protections.

While biometric technology is winning consumers’ hearts, many still prefer traditional methods and continue to complete transactions by manually entering their credit card information. This makes it essential for merchants to accept a flexible array of payment options. Though credit cards may seem old-school in 2025, we’re in the era of network tokenization, so merchants have no excuse to use old-school methods to authenticate credit card transactions.

Network tokenization involves the use of tokens created by the card schemes to encrypt customer data, rather than storing primary account numbers (PANs) found on credit and debit cards. This approach eliminates the need for merchants to store sensitive customer payment data, keeping cardholders’ information secure at every step of the payment process.

Merchants that use network tokens see 30% less fraud, a significant advantage in today’s payment landscape. Fraud isn’t just an inconvenience, it’s a serious financial threat. According to The Association of Certified Fraud Examiners, the average cost of  business fraud is $125,000, an amount that could be devastating enough to shut down a growing small business…

Tokenization is just one piece of the fraud-prevention puzzle. Cutting-edge fraud defense systems now embrace real time with AI-driven fraud prevention. AI will significantly reduce fraud by recognizing patterns that indicate fraudulent activity that most traditional fraud-prevention methods overlook.  These capabilities allow AI to monitor transactions and flag anomalies in real time, preventing fraud with greater accuracy than ever before.

These three tactics can be instrumental in helping merchants protect sensitive data and prevent fraud. The battle between the good guys and the bad guys is ongoing—when tech vendors build higher walls, fraudsters and hackers build taller ladders.

Merchants must stay vigilant in strengthening their fraud and security measures. Partnering with software providers that leverage modular payments infrastructure ensures they can quickly adapt to new innovations and always stay a step ahead. Doing so can mean the difference between building a long-standing, reputable business and facing a devastating lawsuit.

— Lisa Lloyd is a senior product manager at NMI.