We sponsored the Economist Intelligence Unit to conduct a global survey of 1,610 executives — delving into their mindsets and perceptions around fraud, security and commerce trends in the digital domain. The survey found that 82% of global executives and 71% UK executives say they believe digital wallets and super-apps use will improve their company’s revenue over the next five years. The road to earning these revenues while securing customer digital IDs and accounts, however, has some tight learning curves.
The stakes for implementing a strong digital payments strategy are high for consumer-facing companies. Global usage of alternative payments is booming and fraudsters are following the money, potentially putting your customers — and your reputation — at increasing risk.
Pandemic speeds shift to ecommerce
The global transition to ecommerce was already well underway before COVID-19 hit, but the pandemic has accelerated the move to online channels. Statista reports in the first six months of 2020, global ecommerce monthly traffic grew from 16 billion to 22 billion. 1 In the UK, online retail increased to a record level in January 2021 reaching 35.2% up from 29.6% in December 2020 and was far higher than the 19.5% in January 2020 2.
To analyse the digital commerce and security trends facing companies during this transformative period, the Economist Intelligence Unit (EIU), sponsored by TransUnion, surveyed 1,610 executives from companies in 12 countries, including the UK. All respondents were responsible for growing their firm’s digital commerce, improving customer protection or managing the customer experience (CX). More than 60% of those surveyed said their organisation had changed their digital transaction processes as a result of the pandemic, but only a third of them did so without technical failures. The rest experienced either minor (27.3%) or severe (11.6%) glitches or technical failures.
Despite these initial difficulties, survey respondents are generally optimistic digital wallets can enhance revenues. This was especially true in India, Brazil, Chile, the Philippines and South Africa.
In some markets, digital wallets are increasingly integrated into “super-apps,” such as WeChat and Alipay in China, Gojek in Indonesia and Revolut in the UK. We cover super-apps in more depth in the The Transformation and Disruption of Super-Apps and Digital Wallets webinar, but in short, they’re a one-stop online ecosystem for messaging, social media, marketplaces and business services.
When respondents were asked about the top risks super-apps could pose to their organisation, executives identified data sharing with third parties as their second highest concern. This is especially true in regions such as the UK and US where data privacy regulations like the GDPR and CCPA have been rolled out and could complicate collecting personal data. Additionally, there’s increasing noise from regulators about the possibility of anti-monopoly interventions against large tech giants most likely to branch into the super-app space.
In cases of sharing data with third parties, regulatory limitations need not delay digital wallet innovation. Of survey respondents, 51% said such regulations can improve the customer experience. For example, these protections help customers feel safe enough to continue or expand their use of digital wallets.
Security concerns are the biggest barrier to digital payment adoption
Despite being optimistic about this emerging technology, executives point to the barriers of super-apps becoming the dominant portal for digital commerce over the next five years. 48% percent of respondents said the main barrier would be concerns about security, privacy or fraud. It’s reasonable to extend that barrier to digital wallets as well.
Security concerns almost certainly increased because of the pandemic-fueled surge in digital transactions and the inevitable response from fraudsters.
TransUnion’s quarterly Global Consumer Pulse Study (formerly the Financial Hardship Study) found as of March 2021, 36% of consumers surveyed said they’d been targeted by or fallen victim to digital fraud related to COVID-19 in the last three months — up from 29% in April 2020. Phishing scams comprise the largest wave of this increase.
These attacks have exposed account credentials and personal data that fraudsters are using to launch other types of attacks. For example, TruValidate customers reported a 15% increase in account takeover (ATO) incidents over the past year.3
In contrast, reports of credit card fraud have decreased over the last year. Digital wallets and other alternative payment methods have likely contributed to that; their encrypted data and tokenised credentials are more difficult to steal, so fraudsters tend to move on to easier targets.
Advances in biometrics and data analytics can ease friction while maintaining security
Critical tools in combatting ATOs and other attacks without adding undue friction to digital purchases include; multifactor authentication such as one time passcodes and biometrics, including fingerprint, facial or voice recognition. 85% percent of the global executives surveyed expect the vast majority of digital payments over the next 10 years will use biometric authentication.
Data analytics is another technology advancing rapidly,and making digital payment fraud detection and prevention more effective. It’s a highly specialised field, but companies such as TransUnion are making improved data analytics available to all businesses regardless of their existing analytics capabilities.
TruValidate™ Global Fraud Solutions deliver a comprehensive view of each consumer by linking proprietary data, personal data, device identifiers and online behaviours — in real time. This allows us to develop a more complete picture of consumer identity and make trust possible in faceless channels.
For more information
For a more complete discussion around digital wallets, super-apps, ecommerce trend research, and what your company can do to improve CX and data security, view our range of on-demand webinars including — The Transformation and Disruption of Super-Apps and Digital Wallets – and our other webinar recordings.
1 Statista, covid-19-impact-retail-e-commerce-site-traffic-global, Nov 2020
2Office for National Statistics (ons.gov.uk), Retail sales, Great Britain, Jan 2021
3 TransUnion TruValidate consortium data, 2021