Our new report highlights how security isn’t just a desirable feature; it’s become a non-negotiable requirement as online fraud ripples across Europe’s e-commerce landscape.
Merchants and other online businesses across Europe are working hard to meet heightened consumer demands for a quicker, more seamless checkout experience that mirrors the speed and simplicity people have come to expect in our digital, ‘always on’ world.
But this can’t be at the expense of robust security measures.
According to estimates, e-commerce losses to online payment fraud surpassed $44.3 billion last year, with the annual figure expected to hit $100 billion by 2029. Security should be everyone’s concern, and our latest report shows it’s no longer a nice-to-have – it’s a dealbreaker.
“Are consumers being honest about speed and security? When asked if security in online shopping is important to them, very few people are going to say no. In reality, if security is too onerous, and the payment process takes too long or has too many steps, a consumer will shop elsewhere. Retailers (and their payments providers) must work to bring optimum levels of security without overly impacting the consumer. Security is essential in building consumer trust, but it mustn’t be detrimental to the checkout experience.” David Birch, Global Ambassador, Consult Hyperion
Our expansive study of European consumers digs deep into digital behaviour to find out more about what they prioritise in the modern shopping experience, with the majority saying they’ll wait longer at your checkout if they trust your fraud protection measures.
Security takes centre stage
Fraud is spiralling. And the fraudsters are becoming more sophisticated as they adopt new artificial intelligence (AI) tools and other emerging technology to trick consumers.
Deepfake fraud, for example, sees fraudsters using synthetic videos, audio, or images to bypass facial recognition or liveness detection measures, opening the door to account takeover fraud. Recent research found that deepfake fraud incidents have surged by 2,137% over the past three years.
It should therefore come as little surprise that security is a top priority for online shoppers, with our report showing seven in ten (71%) European consumers are now willing to accept a slightly slower checkout if it means stronger fraud protection measures are in place. The figure rises to 75% in Germany.
So while speed and convenience are of course important, for many people they’re less of a priority when security is at stake.
That said, there are regional differences for merchants to consider. In the UK, for example, a third (32%) of shoppers say they’re prepared to have some online fraud protections removed in order to achieve a faster checkout process, while a quarter (25% vs 19% European average) go as far as to say they would be happy to remove fraud protection checks entirely to achieve the fastest checkout experience possible.
Perhaps fraud feels like less of a risk for UK shoppers, with the Social Market Foundation finding they’re the most likely to be reimbursed by their payment services provider (PSP). They shouldn’t become complacent though, with UK consumers losing £11.4 billion to scammers over the past 12 months alone.
Merchants and marketplaces have a duty of care to protect their customers from risks, and the regulators are watching developments closely. Through initiatives like the European Union’s (EU’s) e-Commerce Directive and the UK’s Digital Regulation Cooperation Forum (DRCF), regulatory bodies are focussing on the role of industry players in keeping online shoppers safe.
What our report shows is that merchants must now provide speed, seamlessness, and security whilst avoiding any unnecessary friction. It’s a tricky balance to find. You can either try to deal with these competing priorities yourself, or more realistically look to partner with a payment provider who understands these different market needs and can help you to optimise your checkout experience.
Mixed views around who’s responsible for fraud prevention
While fraud prevention is clearly front of mind for many consumers, it’s also unclear for many who should actually be taking the lead.
Around two-fifths (44%) believe that responsibility falls on retailers, banks, or payment processors; a quarter (25%) think that consumers themselves bear the responsibility; and 32% simply don’t know.
It’s likely that European consumers have been left confused by recent industry debate and legal cases, particularly relating to the growing issue of Authorised Push Payment (APP) fraud.
In the UK, banks and other PSPs are generally responsible for reimbursing customers who fall victim to APP fraud. The APP Fraud Reimbursement Scheme took effect in October 2024, mandating that PSPs reimburse customers for losses up to £85,000 within seven days of reporting the fraud, subject to certain exceptions. But these exceptions aren’t always clear cut. Santander recently scored a significant High Court victory in an APP fraud case over its responsibility to return £415,000 that was sent to a scam account.
This lack of clarity and disagreement about responsibility highlights a gap in consumer understanding and presents an opportunity for proactive businesses to build trust by being transparent about the security measures they have in place.
You should clearly communicate the fraud protections you’ve implemented in order to reassure your customers. You should also consider taking steps where possible to help educate consumers by providing resources about issues such as phishing, password hygiene, and multi-factor authentication (MFA).
Stronger security measures help to protect businesses and consumers alike, and they’re also playing an increasing role in fostering customer trust and loyalty. Working with trusted payment providers will enable you to more easily implement seamless fraud prevention tools that don’t add the unnecessary friction that can have a negative impact on your conversion rates.
Download ‘The state of European checkouts: Consumer expectations, payment preferences, and security insights’ to help you strike the perfect balance between safety and efficiency.