Studies find uneven digital commerce adoption, outcomes

Digital commerce security and financial health are under fire in the United States and abroad. Circles of Trust: How the UK Public Perceives Digital Risk, published June 16, 2022, by Utimaco, found 70 percent of consumers surveyed are deeply concerned about safety when transacting online.

A J.D. Power Banking and Payments Intelligence report, authored by John Cabell, director, banking and payments intelligence at J.D. Power, and released June 9, suggests digital commerce has eroded responsible spending among U.S. consumers.

Researchers from both firms found older consumers are more cautious and concerned about identity theft, fraudulent attacks and cybersecurity vulnerabilities than their younger counterparts.

Broken circles of trust

Ansgar Steden, chief revenue officer at Utimaco, stated the company's research highlights public perception of cybersecurity solutions. "[B]ulletproof security is only effective when it is perceived to be so by users, so as the report identifies, companies need to be able to combine security with communicating with users about how they are keeping them safe."

Steden further noted that Utimaco researchers found a central paradox in online society, which is that most people are enthusiastic about digital services but deeply concerned about safety when using them. This poses a challenge for digital service providers, he added, which aim to increase efficiency and inclusion through online services.

Utimaco researchers found distrust increased with respondents' age and also found heightened concerns among highly educated respondents and those who had the least amount of formal education. However, most respondents were comfortable accessing Great Britain's National Health Service online, according to the survey, which researchers suggested may have been more related to public trust in NHS than security concerns.

A copy of the report is available at utimaco.com/survey-how-trust-works-digital-world.

Good apps, bad habits

J.D. Power Banking and Payments Intelligence researchers conducted a pulse survey to assess digital payments usage and customer experience. While only 2 percent of consumers surveyed used a mobile wallet and only 1 percent used buy now, pay later (BNPL) and person-to-person (P2P) payments, researchers suggested BNPL and P2P schemes make it easier for young customers to overspend.

Researchers noted that consumers under the age of 45 have less understanding about alternative payment methods, which means they are less likely to leverage reward programs or pay off monthly balances each month and are more likely to overdraw accounts. Following are survey highlights:

• Young consumers like digital: Overall customer satisfaction is highest for credit cards (4.4 on a 6-point scale) and BNPL. Satisfaction scores are higher for these digital alternatives among customers ages 18 to 44 than they are for those ages 45 and over.

• Consumers want choices: Use cases and life stage appear to influence the decision to use one payment type over another. The primary reason for using credit cards among 61 percent of customers ages 45 and older is to earn valuable rewards with purchases. Among customers younger than 45, just 36 percent are using their credit cards to earn rewards, while 25 percent are using credit cards to break up their payments over time.

• Everyone likes debit cards: Consumers of all ages use debit cards for large recurring expenses, such as rent, car payments or insurance, and appreciate the lack of interest charges associated with debit transactions.

• Young consumers struggle with financial health: 38 percent of consumers ages 18 to 44 only partially understand payment methods and 5 percent do not understand them at all. As a result, 41 percent of young customers pay off their credit card statements each month, and 28 percent sometimes overdraw their checking accounts with their debit cards. Young consumers like BNPL but many do not pay on time and are thereby disqualified from interest-free options.

More information about this survey is available at: www.jdpower.com/business/resources/banking-and-payments-intelligence-report-bnpl-problems.

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