Consumers are ready to use advanced authentication solutions for safer online retail purchases, says Javelin Strategy and Research in its latest report.
In 2012, online retail payments reached 7.4% ($318 billion) of all retail transactions. The thriving online market is an increasing target for fraudsters to both steal and misuse consumer data as data breaches and malware evolve as the primary means to acquire this valuable information.
“Yesterday’s fraudsters picking pre-approved cards from mailboxes could be compared to robbing a cash register. Today’s fraudsters are cleaning out the safe through data breaches and malware,” says Al Pascual, senior analyst – Security, Risk, and Fraud at Javelin Strategy & Research. “Improved authentication is critical as fraudsters now have access to copious amounts of compromised personal information and payment data. Merchants need to surmount unfounded fears of consumer backlash as consumer familiarity will breed comfort and confidence in using newer, more secure authentication measures.”
Most consumers are not familiar with authentication technologies for use during online retail payments, but that is about to change. While two-thirds of consumers say they are well-acquainted with static security questions (see chart), many merchants are apprehensive about introducing additional steps into the checkout process that may introduce friction and contribute to shopping cart abandonment.
But, several emerging solutions offer less intrusive ways, such as advancements to the 3-D Secure platform and Fast Identity Online (FIDO) to authenticate consumers for online and mobile transactions.