Half of Canadians resist move to ‘frictionless’ payments due to privacy and security fears; cash continues to thrive

Paysafe launches new global research into consumer payment trends

London, UNITED KINGDOM


MONTREAL, June 06, 2018 (GLOBE NEWSWIRE) -- The shift towards ‘frictionless’ payments – i.e. invisible transactions that take place ‘behind the scenes’ in apps – is being held back by Canadians’ concerns over security and data privacy, according to new research conducted by Paysafe. The report from the leading global payments provider uncovers some unexpected findings. For these ‘invisible’ payments, figures show:

  • 53 percent of Canadians cite fraud as the biggest barrier to using them. 49 percent express concerns around the use of their data;
  • Two thirds of consumers (65 percent) think voice-activated systems are not secure. 68 percent worry about being overcharged if they used this type of service; and
  • 56 percent report that checkout-free stores – where smart technologies record the shopping basket and automate payments – sound too risky, or they’d need to know more before using them.

Meanwhile, other emerging payment methods are polarizing consumer opinion – 28 percent of Canadians would let fridges automatically re-order food, but 55 percent don’t expect to adopt the technology in the next two to three years.

The report, called Lost in Transaction: Payment Trends 2018, is an international research study investigating consumer attitudes to new and traditional payment methods.  The research incorporates consumer views from Canada, US, UK, Germany and Austria, and draws comparisons with Paysafe’s inaugural Lost in Transaction report in 2017.

Perhaps surprisingly, cash continues to thrive as the most common form of payment: 83 percent of Canadians used it in the past month to make a purchase. ATM visits were up too – 77 percent had visited one in the last month, compared to 74 percent in 2017. Yet 56 percent of Canadians say they carry less cash than a year ago, though the difference is small, with the average being just $2 less at $43 in 2018, down from $45 in 2017.

Contactless is starting to be adopted by Canadians, with a fifth (19 percent) having used it in the last month, though the growth appears limited compared to the 58 percent of Canadians who reported have tried contactless in 2017. There is a similar picture in the US where just 3 percent have used contactless in the last month, in spite of the fact that 40 percent of Americans reported trying contactless in the 2017. Growth was highest in the UK, where 54 percent of consumers had used it in the previous month.

However, even if people are carrying less physical cash, they are finding other ways to keep cash at the forefront in the overall mix. For example, in North America, prepaid cards are the most popular cash alternative, used by 18 percent of Canadians and 16 percent of Americans respectively; and in Austria and Germany, cash replacement systems are used by 12 percent and 9 percent of respondents respectively.

Commenting on the research, Daniel Kornitzer, Chief Business Development Officer, Paysafe Group, said: “In Canada, more so than other countries, cash usage has remained fairly static year-on-year. Despite the apparent benefits of low-friction payment technologies, these findings suggest many consumers aren’t ready to lose visibility of the payment process. This underlines the challenge for merchants to balance providing both new and traditional payment options for consumers using a range of options in their everyday lives. It’s clear that the benefits are not unilaterally agreed upon, with cultural and infrastructure trends at play, and it may be some time before adoption is widespread.”

The report also highlights the growth of digital wallets: 42 percent of respondents had used one for an online purchase in the past month – more than debit cards. Digital wallet usage ranged from 39 percent in the US to a high of 61 percent in the UK.

But when it comes to fraud, the report highlighted a convenience versus risk paradox and a geographical split in how fraud impacts payment behaviour locally:

  • 64 percent of Canadians and 70 percent of Americans believe online fraud is inevitable, but only 28 percent of Germans and 26 percent of Austrians hold the same view;
  • More consumers in Germany and Austria choose to pay by invoice rather than debit card. 55 percent of Austrians and 49 percent of Germans say it feels safer.  

Kornitzer adds: “More than three quarters of Canadians say they will not shop on their device when connected to an unsecured network. If retailers, merchants and payments companies want to disrupt the old way of doing things they must make all underlying processes feel secure. These consumers are savvy, and therefore any evolution in their payment behaviour will need to match up accordingly. Consumers want convenience, but they want protection too. They are making sensible choices when it comes to security and are willing to change what they’ve used to ensure they’re not at risk of fraud.”

To read the full report, which includes comparisons between consumer attitudes to online shopping, payment habits, cash, frictionless payments and perceptions of security and fraud in Canada, US, UK, Germany and Austria, click here.

Additional key statistics – Canada

Invisible & frictionless payment usage

  • Only 24 percent have used frictionless payment in apps to pay for goods and services, despite the widespread awareness of services.
  • 16 percent have tested a voice-activated payments system.
  • 43 percent of smartwatch owners have made a payment on their device.

What’s holding Canadians back from ‘invisible’ payments?

  • 31 percent are concerned systems may inadvertently buy things.
  • 28 percent are worried spending may not be controlled.
  • More than a third (34 percent) of Canadians said they were already losing track of their subscription-based payments and are thus wary of adding new services such as fridge-based re-ordering.

Re-ordering

  • 40 percent of Canadian consumers say they are open to using a smart button to re-order frequently used items, which are typically of lower value. This suggests consumer usage of frictionless may be linked to the value of a transaction. 

Contactless

  • Of contactless users, 74 percent of Canadians say contactless has become convenient to the point at which they don’t require physical cash, with 46 percent wanting the contactless limit raised.

Fraud

  • Consumers in Canada experienced an increase in the amount of fraud in the past year, reporting a jump from 22 percent to 29 percent.
  • Globally, 18 percent of credit card users say they have experienced fraud, 15 percent of bank card users suffered fraud on their card, and 15 percent of digital wallet users were targeted.
  • Despite its prevalence, most consumer fraud in Canada is under $100 in value and 64 percent of Canadians say it was resolved within a week.

About Lost in Transaction 2018
Lost in Transaction: Payment Trends 2018 is an independent research project supported by London-based agency Loudhouse in Q2 2018. It follows Paysafe’s inaugural Lost in Transaction report in 2017. The research was completed among 5,056 consumers from the US, UK, Canada, Germany and Austria. Respondents came from six different age groups and a variety of different professions.

About Paysafe
Paysafe is a leading global provider of end-to-end payment solutions. Its core purpose is to enable businesses and consumers to connect and transact seamlessly through industry-leading capabilities in payment processing, digital wallet and online cash solutions. Delivered through an integrated platform, Paysafe solutions are geared toward mobile-initiated transactions, real-time analytics and the convergence between brick-and-mortar and online payments. With over 20 years of online payment experience, a combined transactional volume of US $56 billion in 2017 and over 2,600 staff located in 12+ global locations. Paysafe connects businesses and consumers across 200 payment types in over 40 currencies around the world. For more information, visit www.paysafe.com


        

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