Fear of contactless fraud leaves UK consumers demanding more secure payment methods
October 2019 by IDEX Biometrics ASA
Although contactless payments are one of the UK’s greatest banking innovations, research from IDEX Biometrics ASA has revealed that consumers are still highly concerned about the threat of contactless fraud. In fact, more than three-in-five (63%) UK consumers are worried that their contactless payment cards could be used fraudulently. As a result, UK consumers are ready to welcome the introduction of biometric payment authentication to secure contactless transactions.
While nearly half (48%) of consumers believe contactless cards have made their in-store shopping experience more convenient, a greater 57% are concerned that these payment cards leave them exposed to theft and fraud. Even more alarmingly, more than half of consumers (54%) fear that criminals could scan a contactless card in their pocket, making them a victim of theft without their knowledge.
As well as the fraud concerns, shoppers also find the current £30 limit for contactless payments frustrating. Two-in-five (44%) of 25-34-year-olds believe that the limit should be removed altogether, with nearly one-third (27%) of adults overall agreeing. For younger shoppers, PINs are just as much hassle; more than a third (35%) of 18-34-year-olds will make sure their transaction is under £30, so they can simply tap and pay.
These findings highlight that UK consumers are demanding a more secure method of payment to protect them against the perceived risk of contactless fraud. In response to this, some banks and retailers have already rolled out Strong Customer Authentication (SCA), to meet the Second Payment Services Directive (PSD2), which came into play on 14th September. This requires customers to use two factors of authentication, such as a PIN combined with the possession of a payment card, even for contactless payments. However, with more than a quarter (26%) of those with a bank account concerned about the security of PINs to keep their money safe, not even these measures are strong enough for consumers. Instead, nearly half (49%) of consumers would actually feel more secure if they were able to use their fingerprint and PIN to authenticate transactions via their payment card. This shows that consumers would be much more confident about contactless payments if their bank card was protected by biometric authentication, not just relying on PINs and card possession as methods of two-factor authentication.
With fingerprint biometric authentication cards, the fingerprint data template is stored securely in the card’s EMV chip, and not in a central database, meaning the customer’s details never leave the card. This is an important distinction for UK consumers: nearly half (44%) state that if banks can assure them that their fingerprint biometric data would be safe, unshared and not held anywhere, they would be happy to use biometric authentication as a replacement to their PIN. “As the number of contactless transactions in the UK continues to rise, the financial industry must do more than just introduce SCA to address consumers’ growing concerns about card theft and contactless fraud. More than a third (35%) of UK consumers already expect fingerprint biometric authentication to be rolled out for transactions by 2020, so banks must respond quickly to adopt reliable and protected contactless cards, backed by biometric technology,” comments David Orme, SVP, IDEX Biometrics ASA.
“Fingerprint biometric authenticated payment cards can’t be scanned from your pocket, or used without your knowledge, as the card needs the owner’s fingerprint for a transaction to work. This ensures a superior level of security for contactless payments. By adopting this form of card authentication, we can say goodbye to contactless fraud and leave the £30 payment limit behind for good,” he adds.
Methodology and sample:
1,000 interviews were conducted in the UK by Arlington Research, an independent market research agency, using an online methodology amongst a nationally representative sample of consumers, who have either a UK current account, and/or a credit card. All respondents were aged 18 and over. Quotas were applied to gender, the age of respondent and the region in which they reside to ensure that the sample is nationally representative (+/-1%).