Nearly every part of daily life has changed as the world continues to fight back against Covid-19.
Bevan Smith, head of risk at Visa Sub-Saharan Africa
Most observers agree that the increased focus on digital commerce by consumers and merchants will likely remain even after a vaccine is found and the economy rebounds.
As the pandemic and its economic impact extend into 2021 and beyond, these new habits will likely crystalise.
It is important for merchants and financial institutions to adapt now to support consumer behavior through safe, reliable digital commerce.
A shift to online channels by consumers and fraudsters
Globally, consumers are shopping more online. Just look at the numbers.
* In South Africa, in-store physical activity greatly dwindled, with 63% consumers visiting physical grocery stores less often.
* In Nigeria, more consumers turned to online shopping for the first time with 42% of shoppers starting to purchase food via e-commerce platforms.
* In Kenya, consumers’ preference for digital solutions is fast increasing as customers turned online for shopping. 43% of consumers started purchasing from pharmacies online.
* In the US, Visa credentials active in spending on eCommerce channels, excluding travel, were over 12% higher in June than in January. Moreover, when you examine the active credentials who tend to be more significantly engaged in e-commerce, the spend per active credential increased by over 25%. In the UK, active e-commerce credentials increased 16% while spend per active credential increased 3%.
Where consumers go, fraudsters follow and Visa’s Payment Fraud Disruption (PFD) team has seen a similar shift in fraudulent activities/fraud attempts from in-store to online.
Between March and April 2020, there was a rise in fraudsters establishing short-term “Covid”-named merchants and using these fraudulent merchants to perform account testing and enumeration.
This is where fraudsters use merchants or financial institutions to guess account numbers, expiration dates and CVV2/security codes through automated testing.
This activity is often marked by high volumes of low-dollar declines.
Our Visa team also saw an increase in e-commerce skimming attacks, where fraudsters inject malicious JavaScript code into the websites of merchants and service providers to digitally harvest payment information such as billing address, account number, expiration date, and CVV2 from the checkout forms on ecommerce pages.
In April 2020 alone, PFD identified 90 merchant websites compromised by multiple variants of ecommerce skimmers.
Fortunately, fraud prevention capabilities such as Visa Account Attack Intelligence, which prevents account testing, and Visa E-commerce Threat Disruption, which prevents online skimming, are free of charge and are among the many fraud prevention layers and security benefits available to Visa clients.
Embracing tap to pay for peace of mind
While online commerce has increased, in-store purchases have not gone away.
Essential workers still have to go into the office and re-fuel for their commute and some goods simply cannot be purchased online and delivered to consumers.
In these situations, contactless card payments can offer peace of mind and Visa data shows consumers are increasingly embracing this.
And, as Main Streets and High Streets around the world reopen, consumers are asking for more touchless options to pay.
Touchless, or contactless payments, where one can tap to pay with a card or smart phone, enables a safe and secure experience without the need for consumers to touch the checkout terminal and early indications show usage is high among grocery stores and pharmacies.
A few other trends include:
* Nearly 50 countries improved tap to pay penetration by more than 5% and over 10 countries increase by 10% or more from fiscal year Q2 to Q3.
* Visa helped more than 55 countries increase the tap to pay limits, reducing the share of transactions that require consumer contact by more than 40% in several of those countries.
* In the US, more than 80M contactless Visa payment cards were added in the first six months of the calendar year as financial institutions accelerated their issuance schedules.
Despite the increase in penetration and card issuance, the fraud rate for contactless payments is significantly lower than the overall card present fraud rate, which illustrates the security of tapping to pay.
Although there may be some regression back to the norm after the pandemic, it is not a leap to think some habits will remain.
The shift to buying online and the convenience and security of tapping to pay in-store are ones I think are here to stay.
For merchants and financial institutions, adapting to new consumer habits not only means meeting customer preference, but it is also an investment into the future of digital payments.