Consumer Perception of Card Security

There are few things that I enjoy more than data. As such, I am delighted when a press release, or analyst report, is announced that not only provides summary information but also detail on the methodology that was used and data that was obtained. Just such an occurrence happened today…

The Secure POS Vendor Alliance (SPVA) dropped a press release that details consumer interviews worldwide on their usage of payment tenders and perspective on card security. The release, entitled New Consumer Research from the Secure POS Vendor Alliance Underscores Need for Greater Payment Security Measures not only provides summary detail, and a key findings, but an excel document that details responses to the questions both in summary and in regional detail.

In the release itself, they highlight several statistics that, quite compellingly, point toward a measure of consumer concern over the security of their transactions. There is some interesting information about consumer spending preference and amounts that requires some further analysis…but I am struck by something in the tenor and detail of their release.

NOTE: The data that I present below is culled from the downloadable detail they provide and, as such, may not appear in their summary or release.

What statistics were most compelling initially??

73% of consumers worldwide indicated they think about card security “always, often, sometimes” when making an in-store purchase whereas 86% of consumers indicated they think about card security “always, often, sometimes” when making an online purchase…a 13% difference. When comparing online to in-store, only 28% consider security “always” in-store vs. 41% online.

There is clearly a perception of insecurity in online purchase.

In addition, the following question was asked:

What does being ‘security conscious’ with your cards mean to you when making a PIN or signature-based purchase with your credit or debit card(s)

Far and away the highest response was around ensuring that no one was standing to close during the PIN or signature step. 27% of respondents indicated that they trusted the “security processes behind card transactions”…the only lower response (other than none of the above) was that of using an “alternative means of payment whenever i can.” To engage in a bit of speculation, it would appear that although the security of card transactions is not trusted…the ease of use of card transactions is compelling enough to drive substantive volume.

Quite clearly, and the purpose of the press release, was to indicate that consumer perception of security is growing…and with this growth merchants, service providers, hardware providers, software companies, sales channels (in essence, anyone who engages with the merchant or consumer) must take steps to both address security and to educate the merchant/consumer on the security that is in place.

There was one section of the release itself that I found intriguing:

Sixty-five percent of respondents report that they are often or always concerned about Internet fraud. However, those fears may be unfounded. Only 43 percent of those who reported having their security compromised believe it happened online. This finding is in line with prominent research, including the 2007 Identity Fraud Survey Report by Javelin Research.

“those fears may be unfounded”

I agree. However, it is important to note that the category of “internet related transaction” superseded the “other” category by 13% and the combination of other options (of which there were 6) by 19% (30% to other, 26% to balance).

What does this mean?

An unfounded fear is still, in fact, a fear. It is important to recognize said fear and how it motivates consumer preference and interaction. If you consider this statistic, it is not surprising that consumers focused on security much more highly when performing an online transaction.

To be clear, I’m not espousing “FUD” marketing. If my time spent arguing logical fallacies in college taught me nothing, it is that an “appeal to fear*” is considered a fallacy.

However, for those of us involved in marketing, sales, technology, etc in the payments industry the recognition of consumer fear is important. As said above, I firmly believe that fear is a component of driving consumer behaviours. I don’t have a copy of the 2007 Identity Fraud Survey by Javelin…but if internet based fraud accounted for 43%, I would be intrigued to identify the percentage that was truly driven by compromise at the POS vs. a compromise further back in the network (ala Heartland, Card Systems) or other identity fraud mechanisms.

Don’t appeal to fear. Recognize the fear. Acknowledge the fear. Educate about how that fear can be dispelled and ensure your technology is in a place to make your statements reality.

What’s your perspective? Agree? Disagree? Anything to add? Critiques? The comment form is below…

*my old ethics textbook refers to it as “argumentum ad metum”

July 3, 2009

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