Paysafe's well-timed open banking card

Paysafe Group, a global provider of end-to-end solutions with U.S. headquarters in Houston, disclosed June 7, 2018, that its prepaid product, paysafecard, will be accepted in the Google Play Store. Paysafe plans to roll out the card in Europe following a pilot test in Poland, which is home to more than 1 million paysafecard cardholders, company representatives stated.

By removing the need for online shoppers to share banking or credit card credentials, Paysafe expects paysafecard to appeal to underbanked, video gaming and privacy-conscious consumers while also complying with European Union privacy regulations. Udo Müller, CEO at paysafecard, said these expectations are consistent with company research on consumer trends.

Addressing fraud concerns

"The risk of fraud and sharing personal data online still concern many consumers," he said. "Lost in Transaction: Payment Trends 2018, our proprietary research launched earlier this week, shows that half of respondents worry about fraudulent purchases and 48 percent worry about the safety of their personal data. This is why offering paysafecard as a way to pay in the Google Play Store has come at the right time to enable consumers and both companies to benefit."

Todd Linden, CEO at Paysafe North America, added, "Seven out of 10 Americans are prepared to accept that fraud is an inevitable risk of shopping online. If retailers, merchants and payments companies want to disrupt the old way of doing things they must make all underlying processes feel secure. Consumers want convenience, but they want protection too."

Balancing innovation, protection

Lost in Transaction: Payment Trends 2018, updates data from Paysafe's 2017 report, providing insights from 5,056 consumers in Austria, Canada, Germany, the United States and United Kingdom. While buying behaviors varied across regions, researchers observed a majority of survey respondents were distrustful of payment-enabled connected devices and emerging ecommerce payment schemes, due to concerns about privacy and security.

Researchers cited Amazon Go and Uber as examples of new invisible payment schemes that add convenience but may also seem too good to be true to some consumers."[B]y making literally everything invisible, merchants risk frightening people rather than enticing them," they wrote. "The advent of regulation such as PSD2 in Europe is likely to amplify this challenge, as consumers are invited to trust new third parties about which they may know very little."

The European Union's Payment Services Directive 2 (PSD2), which became effective Jan. 13, 2018, gives non-banking entities access to financial institutions' consumer data. PSD2 is part of an open banking initiative, designed to encourage competition and innovation in financial services. As a countermeasure, the EU's General Data Protection Regulation was enacted on May 25, 2018, giving consumers more control over how companies use and store their data.

Earning consumer trust

Linden suggested that consumers who trust a payment system's security and fraud protections will be more likely to change buying habits and try new payment schemes. Merchants who do not enhance security may lose customers to others who offer more robust protections, he noted. Following are additional highlights from the report:

• Privacy: 52 percent of respondents had concerns about use of their data.

• Voice-activated systems: 65 percent of respondents believe voice-activated systems are not secure; 69 percent think they may be overcharged if they use voice commerce.

• Checkout-free stores: 57 percent are hesitant to shop in stores where smart technologies record the shopping basket and automate checkout, mostly due to fear of the unknown.

• IoT payment-enabled devices: 34 percent of consumers would let fridges automatically re-order food; 50 percent don't expect to adopt the technology in the next two to three years.

• Cash: researchers were surprised by the resilience of cash, which continues to be a common payment method worldwide. 82 percent of Americans used it in the past month to make a purchase, but 55 percent of Americans carry less cash than a year ago, falling from an average of $50 last year to $42 in 2018, researchers noted.

• Contactless payments: While 40 percent of U.S. consumers tried contactless in 2017, only 3 percent of consumers surveyed reported transacting with NFC in the past month. In Canada, 58 percent tried contactless in 2017 but only 19 percent used it in the past month, according to the study.

• Prepaid cards: Prepaid payment schemes are a popular cash alternative in North America, where they are used by 16 percent of Americans and 18 percent of Canadians, researchers noted. In Austria and Germany, cash replacement systems are used by 12 percent and 9 percent of respondents respectively.

"There are more challenges to tackle with other low friction payment technologies as these findings suggest many consumers aren't ready to lose visibility of the payment process." Linden concluded. "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."

Editorial Note:

Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.

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