PINcept.com: Security Fears Stunt Growth, HomeATM Stunts Security Fears

Security Fears Stunt Growth, HomeATM Stunts Security Fears

This Finextra article was the basis for this post: Click any pic to enlarge

Finexta: Security fears are stunting the growth of e-commerce in the UK, with refusenik consumers citing media scare stories and personal accounts of online credit card fraud as reasons for not shopping on the Web.

More than half the UK population still does not shop online, according to a survey of 1000 consumers undertaken by tech security outfit, CyberSource. Reasons range from simple preference for high street shopping to lack of a computer or Internet access.

However, 41% of people who don't shop online also cite security fears as a cause for concern.

The study found that the most common source of information about the safety of online shopping is stories in the media. But consumers also rely on friends and family for advice. About a third of survey respondents say that they or someone they know has been a victim of online credit card fraud. "With the abundance of media coverage about security breaches, it is not surprising that some shoppers are frightened off," says Simon Stokes, managing director of CyberSource.

"The challenge to the industry is educating consumers to shop safely, to minimize their exposure to fraud."

My thoughts: The folks at HomeATM realize that educating consumers is part of the solution, but first and foremost, it is the media who needs to be further educated regarding the perils and pitfalls, trials and tribulations, and security ramifications involved with entering/typing their card information into a browser space.

This week I brought you annoucements regarding PayPal's new personal card swiping device, offered through Dell. PayPal's Says Don't Type...Swipe!. (see pic on right)

In addition, I also posted a story regarding ProPay, who is hosting the Data Security Summit, and their personal swiping device. Data Security Summit Host Says Don't Type...Swipe! (see pic below left)

This represents the beginnings of a fundamental shift in understanding that online transactions are safer when done outside the browser space.

Of course, neither device can measure up to what HomeATM has to offer. Our device not only provides, at a very minimum... what theirs does, but it has the added security benefit of incorporating a fully encrypted PIN Pad, providing yet another significant security benefit called dual-authentication. (What you have/card and What you know/PIN)

As I mentioned in those posts, our personal "SwipePIN" device can also be used for P2P and Me2Me money transfers. Why is that significant? Well, as one blogger at BankInnovation.net says when speaking of mobile banking:

The point of talking about it here is that I think these alternative payment systems might end up driving adoption of mobile banking.

P2P (person to person) payments are potentially the gasoline to the rising mobile banking flame. The draw back to many mobile P2P services (e.g. PayPal) is that many times they are competing with cash transactions. Exchanging cash is free. Exchanging funds with PayPal is not. PayPal, and many other services charge fees to the recipient or sender. Many of the companies touting new payment methods are aiming to reduce those fees and push their service to the masses. If they succeed, mobile P2P payments may become pervasive and mobile banking usage will explode.

HomeATM understands what it takes to make a online transaction secure, and it is also aware of the fact that online shopping behavior is going to be affected by all the recent breaches. We feel that online consumers will soon understand the "common sensibility" involved with using a secure device utilizing existing bank rails and providing end-to-end encryption to protect their sensitive data. In the meantime, we will continue to cover all the reasons why you should be SwipePIN instead of Typin'....

The above article focused on online financial behavior in the UK. It's no different here in North America...nor anywhere else for that matter. Here's a sampling from a report by Forrester Research from last week:

Three Ways Online Security Affects North Americans' Financial Behavior
How Secure Consumers Feel Online Affects What They're Willing To Do

This is the first document in the "Perceived Online Security" series by Brad Strothkamp, Peter Wannemacher with Courtney Tincher, Carlton A. Doty

Executive Summary (This is a document excerpt)

For the past five years, Forrester has tracked the degree of security consumers feel when using financial information on the Internet.

By analyzing these trends and our most recent survey data, we found that security is a key factor in consumers' willingness to shop and buy financial products on the Web. Online consumers who feel secure are more than twice as likely to pay bills online as those who feel insecure and more than three times as likely to apply for a financial product online. eBusiness professionals at financial firms should proactively try to strengthen consumers' sense of online security to increase their use of the Web.

You may purchase the report for $749 from Forrester, and read all about it. Or you can call HomeATM and we'll put together a custom solution for your financial institution.