Are Banks Part of the Problem in Mobile Payments Acceptance?

There are those out there who believe a little too much caution in life is better than a little too little. An excess of caution can sometimes get in the way, and a new study sent our way from Riskified suggests that that’s going on in mobile payments as well, with banks turning down a pretty substantial portion of online transactions out of an excess of caution.

The Riskified study found that 70 percent of the declines people run into aren’t because fraud is being committed on an epic scale, or because people don’t have near the cash they thought they did. That bloc of declines happen to people who can afford to make purchases, but in many cases, are banks making mistakes in the authorization process, declaring a purchase fraudulent that isn’t really.

Banks are a bit under the gun on this one. Over 60 percent of all online transactions are carried out via a card, reports note, and the banks’ payment processors aren’t keeping up with the trend. The combination of this cautious stance and a rapidly rising payment volume means banks are crying wolf far too often, and it’s starting to have a negative impact on online shopping in general.

For the average merchant, the study noted, one in every 10 dollars spent online is actually declined during payment authorization, which will shut down a whopping $340 billion in sales. With customers turning around and blaming the retailer—who the customer figures must be involved—that’s going to be a serious hit in terms of lost revenue to retailers thanks to reduced customer experience.

A WOW Local Marketing study found that 55 percent of users that have a “frustrating experience” on a website hurts their overall perception of the brand. Thus, one of these false-positive declines could ultimately damage a company’s brand image. While we all want banks to protect our money, working too hard to do so can actually work against us and against the entire concept of online shopping.

Mobile payments have come a long way in security, yet here, we see the potential risks of too much security. Hopefully, we can find a better way to protect our information such that these false positives don’t bring down the whole idea with it.