The steady stream of retail data breaches has recently turned into a deluge — and consumers are noticing. Take a look at the latest headlines, with breaches from big-box stores like Best Buy and Lord & Taylor, and you’ll find millions of compromised cards reported, with many ending up for sale on the black market.
Is it any wonder, then, that voters continue to place the most trust in financial institutions to protect payment card information, rather than retailers?
Banks, credit unions, card companies and other financial institutions are constantly looking out for their customers, developing new security technology, closely monitoring accounts and making customers whole again if they’ve fallen victim to fraud. From re-issuing cards to covering the cost of fraudulent charges, financial institutions stay with their customers every step of the way.
But we can’t say the same of retailers, many of which have been resistant to adopting the latest technological advances to protect their shoppers. For instance, they continue to call for the mandate of a 50-year-old technology; personal identification numbers are a static element that do not protect against counterfeit or card-not-present fraud, which make up the vast majority of card fraud in the U.S.
Meanwhile, some are also slow to fully enable Europay, Mastercard and Visa (EMV), even though it has proven to reduce counterfeit card fraud. When a chip card is used correctly, a dynamic code is created to authenticate the purchase and prevent the information from being copied. Yet, whether failing to turn on terminals or not encrypting data at all points in the retail payment process, retailers are doing a disservice to their customers.
Unsurprisingly, recent polling from Morning Consult shows voters expect more from retailers when it comes to payments. Trust in retailers to develop new payment technologies has dropped 15 percent in the past five months, and a large majority of consumers want stores to accept a wide variety of payment methods. To satisfy their customers, retailers should prioritize integrating the latest technologies in the payments space, which can better protect consumers and stores from fraud and make the check-out process easier.
This is the essence of the electronic payments system: It provides value to every single participant, including retailers. Of course, there are costs associated with the electronic payments system. The small fees associated with card acceptance not only maintain the system, but allow for improvements, as well. Nearly four in five voters believe stores should share in the fees and charges that make electronic payments possible — a fair request when retailers benefit from shorter transaction times, fewer risks compared to handling cash, and the potential for higher sales.
Consumers also benefit. From a wide acceptance rate at brick-and-mortar and online stores to security and speed, electronic payments make shoppers’ everyday lives easier. This may be why nearly half of voters report using mobile wallets, online payments and peer-to-peer payments more now compared to a few years ago.
These newer avenues — the next frontier of payments — give consumers even more options to choose from, allowing them to select the payment methods that work best for their lifestyle. Financial institutions are investing millions in this next generation of technology, as well as ways to make payments even more secure through encryption, biometrics and tokenization.
The voters have spoken: Almost all believe data security and privacy are important during the checkout process. For the best and most secure electronic payments system, we believe all players in the payments ecosystem, including retailers, should work together.
If all prioritize giving our customers peace of mind when they dip their card, click purchase or pull out their mobile wallet, we can make our customers that much happier. Financial institutions should not be alone in wanting to invest in new technology and protecting consumers.
Jeff Tassey is the chairman of the board of the Electronic Payments Coalition, which speaks on behalf of the payments industry to protect the value, innovation, convenience, security and competition that exist in the modern electronic payments system.
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