Despite Advances, Security Woes Darken Consumer Attitudes About E-Commerce

A new survey from American Express Co. finds that 37% of consumers abandoned an online purchase because they have concerns about the security of the transaction.

The 2017 American Express Digital Payments Survey, released Tuesday, also finds that, despite these concerns, 47% of consumers increased their e-commerce purchasing frequency in the last year.

But consumers may be adapting to newer payments technologies that attempt to counter fraud. Of the more than 1,000 consumers surveyed, 70% used a digital-payment service, such as a mobile wallet, one-click checkout button, or a person-to-person payment app. And many—41%—always or sometimes use one of these digital-payments services when they pay.

Consumer attitudes about online shopping are important for merchants and payments companies to understand, given the growth in e-commerce. In the first quarter, U.S. e-commerce sales totaled $105.7 billion, a 14.7% increase from the 2016 first quarter, says the Census Bureau of the U.S. Department of Commerce. Most merchants—81%—view online and mobile commerce as the biggest growth opportunity for their businesses, the survey found.

Countering the security perceptions requires multiple measures, says Mike Matan, AmEx vice president of industry engagement, product and marketing, in its Global Network Business. A multilayered approach, such as using fraud detection technology or requiring consumers to enter a card verification code, is the recommendation, he says. AmEx says one of its services uses machine-learning algorithms to make a fraud-risk decision on AmEx transactions within two milliseconds.

“Merchants should take the appropriate steps to address these consumer concerns,” Matan says in an email message. “For instance, merchants can provide additional security measures—including setting up security questions (e.g. what is the model of your first car?), one-time password, or having customers create a profile to complete a purchase—as customers are willing to take these steps to enhance the security of their information.”

Other data from the survey finds that merchants spent 31% of their information-technology budgets on payments security in the past year, with 54% expecting they will invest more over the next year.

There may be a payoff on that investment. Of the 71% of merchants with increases in online and mobile sales in the last year, 58% say enhanced security features they used played a “very significant” role in increasing their sales.

The survey also says that 90% of consumers made an online purchase in the past 12 months, and 73% made three or more purchases. Forty-seven percent said they are making more online purchases in the past year.