As more payments are made online, new research from global analytics software firm FICO suggests that South Africans are concerned about fraudsters using their information to hijack their financial personas. When asked about what fraud practices concern them the most, 36 percent were most concerned about fraudsters stealing their identities and using them to open financial accounts, while 28 percent of South Africans were worried about fraudsters using the information to take over their accounts. Notably, 17 percent of those surveyed had already been victims of account fraud.
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South Africa has experienced a spate of fraud crimes, with the Global Consumer Pulse Study reporting that 37 percent of South African consumers have recently been targets of Covid-19 related digital fraud. TransUnion reported that the percentage of suspected fraudulent digital transaction attempts against businesses that originated from South Africa increased by 44 percent from March 2019 to March 2021.
"Criminals found new ways of committing crimes as the pandemic started spreading worldwide,” said FICO Vice President and Managing Director for MEA, Michelle Beetar
“The changes in human behavior, particularly the switch to more digital methods to manage relationships and finances, created opportunities for more fraudulent activities.
“One concerning finding is that only 8 percent of respondents said the type of fraud they were most worried about was a fraudster tricking them into sending a payment, even though this kind of scam is growing fast and is a major focus for banks. Consumers should understand that it is incredibly easy to be fooled by these scams, which may appear to come from trusted sources such as their bank or a courier delivery service.”
Doubts About Fraud Protection
Nearly one in three respondents to the survey (31 percent) felt that banks did not have enough security checks to protect online payments and more security checks are needed. With regards to setting up debit orders on individuals' bank accounts, 21 percent of respondents said there were not enough checks.
Communication from the Bank
Most consumers prefer receiving communication about suspected fraud via text, while 34 percent prefer receiving a message within the bank’s app. Only 6 percent prefer phone calls.
The greatest irritation to consumers is having to circle through different banking security authentication methods. Some 14 percent of respondents said that messages about a fraud decline take forever to get to them, and a similar number said that having their cards blocked for legitimate purchases is an affront from the banks.
One of the most negative transactional experiences reported was having a card purchase declined at the till. Nearly half (49 percent) of respondents see this as a negative experience, and half of respondents said the same about declines of online purchases. Nearly 39 percent of South Africans said that they would consider changing banks if a card transaction is falsely declined up to 3 times when doing an online transaction, or would change service providers if the same thing happened in-store.
Real-Time Payments Growth
South Africans’ confidence in real-time payments seems to be increasing; half of respondents said they are more likely to use them now than a year ago. While convenience is important, the switch to digital banking is not without risks. SABRIC reported that between 2019 and 2020 instances of fraud through online banking had increased by one third, while overall fraud losses have remained virtually static. These statistics indicate that either many more individuals are being tricked into sending money from their bank accounts or the incidence of compromised digital credentials is increasing in parallel with the adoption of digital channels.
The trend towards digital payment preferences is clear, with 79 percent of respondents saying they will continue to do all their banking through apps or websites, and only 4 percent stating that they will do their banking in person.
“There is a pressing need for banks to find the right balance between security checks and consumer education,” concluded Beetar. “To prevent customers feeling overwhelmed and annoyed by security measures, banks should use their customer communications channels to good effect so that they improve rather than detract from customer experience. They can also ‘invisibly’ check payment transactions, AI and machine learning tools that look at transaction data to identify the signals of fraud are an accurate way to detect and prevent fraud without impacting customer experience.”
The respondents were sampled from all 9 South African provinces and ranged from 18-55 in age with a gender split of 49 percent males and 51 percent females. The survey also included consumers in Brazil, Canada, Chile, Colombia, Germany, India, Indonesia, Mexico, South Africa, Thailand and the USA.