E-commerce in Asia-Pacific is booming – with 71 percent of APAC consumers making an online purchase – but so is the risk of fraud, with one in five customers already falling victim.
These are among the headline findings of the Digital Consumer Insights 2018, published by the world’s leading information services company Experian, and co-authored with advisory firm IDC.
The report is based on a consumer survey across ten APAC markets namely Australia, China, Hong Kong, India, Indonesia, Japan, New Zealand, Singapore, Thailand and Vietnam. The study delves into how well businesses mitigate fraud risk through the eyes of their most important stakeholders, the customers.
It found that as brands and consumers look for ever-easier ways to buy and sell products online and via mobile devices – with electronics, travel and groceries being the most popular – the opportunity for online fraud is escalating.
The report revealed that almost one in five APAC consumers have already had the misfortune of experiencing fraud.
“Asia Pacific is one of the most dynamic digital and mobile economies in the world,” said Ben Elliott, CEO of Experian Asia Pacific. “71% are buying online, and 63% who have adopted mobile payments consider them convenient. But as more people adopt faster and more effortless ways to shop, bank and engage with businesses, fraud exposure will increase. This is a concern with 18% of consumers in the region already experiencing fraud.”
More than half (51%) of consumers would switch service providers in the event of fraud proving that consumers are willing to trade convenience and a better customer experience for better fraud protection.
The report – a companion to Experian’s Fraud Management Insights 2017, which looked at fraud through the eyes of enterprises – also found distinct differences in consumer attitudes between countries.
In mobile-led, emerging markets, people are more convenience-driven and less risk-averse, with the more security-conscious individuals tending to come from mature economies.
“We notice that in more mature economies like Hong Kong and Singapore, consumers are largely more aware of fraud risks and act in a more conservative manner,” added Elliott. “This means they may sometimes avoid transacting online should they perceive a potential fraud risk. This is in contrast to emerging economies like Vietnam, where consumers are less fraud aware and more convenience driven.”
While the unfortunate reality is that greater digital convenience is linked to higher fraud exposure – presenting a problem for both consumers and businesses – the report also revealed that there was a silver lining.
It found that as consumers became aware of the risk of fraud, they were more likely to want to adopt security measures like biometrics, including fingerprint, facial and voice recognition.
In APAC, 13% of consumers are now willing to adopt biometrics, with India (21%), Vietnam and China (both at 18%) leading the charge as early adopters. Australia (9%), Japan and New Zealand (both at 8%) are the least willing to do so.
Interestingly, however, a significant 57% of consumers are already comfortable with biometrics in government/non-commercial applications.
As acceptance extends into the commercial sphere, this new technology will increasingly be able to provide a more efficient customer experience and enhanced fraud protection.
At present, one of the best ways companies can protect their customers is by leveraging high-quality customer data to effectively verify transactions.
However, the report found that this was easier said than done.
The findings detailed that consumers were often selective in the type of information they were willing to share with companies, and were clear on how they would want the data to be used.
For example, when asked, 43% of consumers are willing to have their personal data shared with businesses specifically for better fraud detection over convenience or a better customer experience.
Furthermore, 5% of APAC consumers said they have intentionally submitted inaccurate information to avoid disclosing personal data, while 20% have made mistakes in the details they provided to businesses.
Data input errors were highest in Thailand, followed by Vietnam, Indonesia and India – while Japan has the lowest erroneous submissions followed distantly by Singapore and Hong Kong.
Elliott says this points to a gap in trust between businesses and their consumers, but also provides a significant opportunity for them to make improvements.“Intentional non-disclosure of information heightens the challenges businesses already face in combatting fraudsters and ascertaining the identity of genuine customers,” added Elliott. “We believe that this is fundamentally an issue of trust – and companies
must do more to communicate the value to consumers about the use of data for fraud protection and that they can be trusted as custodians of personal data.”
Nation by Nation
Australia on guard
Australian consumers are the least likely to share their personal data with businesses, or use biometrics for commercial purposes. They are especially cautious about supplying personal data in high-risk environments, such as public WiFi networks. The report found that 22% would refrain from doing so, compared to 19% across APAC.
Not only does China boast the highest adoption of mobile payments amongst all markets surveyed, but Chinese consumers are also the most open to sharing personal data with businesses if it leads to better services and enhanced fraud perception. A staggering 91% were willing for their data to be shared among businesses.
India an early adopter
India has an insatiable demand for digital services and consumers are willing to adopt new technology. The report revealed that India topped the list of consumers who were happy to use biometrics for commercial purposes at 21%. This finding is in line with the progressive approach to biometrics being used by the Indian government.
Consumers in Japan are more likely to submit false data due to privacy concerns, with 8% of respondents admitting do so, above the APAC average of 5%. However, on the flip side, they are the least cautious when it comes to supplying personal data in high-risk environments like a public WiFi network. Only 12% said this was an issue, compared to an average of 19% across Asia Pacific.
Singapore sits in the top three countries that are the least satisfied with how banks and retailers handle fraud. And while consumers are willing to spend up to USD 131 (SGD 172) per mobile or contactless transaction – the fourth highest in the region – their monthly mobile expenditure as a percentage of income is one of the lowest at 2.8%.
While consumers in the Land of Smiles are the most willing to adopt biometrics for non-commercial purposes, unfortunately, they also have the highest error rate in the submission of personal data. – Networks Asia