As merchants prepare for the 2015 holiday season, they’ll need to overcome lingering malaise about information and payment security. The good news is that online touchpoints can play a starring role in the effort.
Thanks to a series of high-profile security breaches since late 2013, from Target to Neiman Marcus to Michael’s to Home Depot, shoppers are jittery about the safety of their transactions, with repercussions for merchants’ bottom line. Fully 45% of all shoppers say they don’t trust merchants to keep their information safe, according to the marketing firm Retail Perceptions; a third say they’ve hesitated to make purchases online due to security concerns, and 29% have been reluctant to make purchases at physical stores, according to BizRate Insights.
Of those who’ve actually experienced a data breach, more than a third say they’ll shop at the targeted retailer less frequently, and a third say they shared their experiences via social media. Of those who do persist with the brand whose data was breached, 26% say they intentionally spend less.
And lest merchants think the nervousness is confined to tech-averse oldsters, data from defense specialist Raytheon reveals that even Millennials (aged 18-24) are pessimistic about online data security. Four in five are concerned that personal information can be collected about them online, 77% worry about identity theft — and more than one in four have abandoned a shopping transaction due to security concerns.
If there’s a silver lining for eCommerce merchants, it’s that online shopping on desktop or laptop computers is actually considered the most secure shopping touchpoint, edging out brick-and-mortar stores by two percentage points, according to BizRate — likely because those big data breaches in the past year were via retail store point of sale terminals. Not surprisingly, mobile was considered the least secure, with 65% of shoppers saying merchants didn’t offer enough in the way of security for transacting and sharing information via their devices.
Counteracting these negative perceptions and earning trust is crucial to winning sales, especially during the upcoming holiday season, when shoppers’ gift research could bring them into contact with new brands whose security track record is unknown. While it’s likely too late to enact basic technology upgrades in support of PCI compliance, encryption and tokenization, there’s still time for merchants to make strides on the security front and spotlight their commitment to keeping shoppers’ information safe. Among the strategies:
Tighten internal controls — especially with an mPOS rollout. Revising and enforcing internal business rules that can close a substantial portion of security loopholes. Just 38% of breaches are caused by actual hacking from external sources, according to the Online Trust Alliance, whereas fully 29% arose from a lack of internal controls such as password policies, and 21% were caused by lost or stolen company devices, equipment or documents. Especially as more and more store associates begin using online brand resources and facilitating purchases via mobile points-of-sale, having security policies and procedures and taking them seriously are essential.
Adopt alternative payments. As we’ve stressed repeatedly over the years, alternative payments can allay shoppers’ fears by giving them a means to complete purchases without entering credit card data. Offering a quick shortcut through checkout is especially important for mobile shoppers, who not only need extra reassurance that their transactions are safe but also are hard-pressed to peck out numerous form fields using a handheld device’s keyboard.
Merchants who offer alternative payments should promote them well before the cart and checkout, so shoppers know they can complete their transactions safely and efficiently from the get-go. MarketLive merchant Sport Chalet promotes its affiliation with Visa Checkout prominently on the front page and even offers a promotional discount to those using the service.
Enable a saved cart. Give shoppers the flexibility to complete checkout wherever they most feel comfortable doing so. With desktop or laptop eCommerce sites perceived as least lacking in security features, mobile shoppers may well wait to complete orders until they get home.
Watch the horizon for still more options. Not only should merchants be considering mobile payments, especially in connection with their mobile apps and loyalty programs, but they should keep an eye out for further innovations as vendors jostle to offer the ultimate seamless-and-secure payment solution. One such cutting-edge technology employs facial recognition software to tie shoppers to their stored payment data using selfies snapped on a mobile phone. While futuristic-sounding, this payment method is already offered by the firm Etup on college campuses — and Chinese commerce giant Alibaba debuted “Smile to Pay” in March, with plans to launch it widely coming soon.
How do you put shoppers’ minds at ease when it comes to payment and personal information security?