Wirex Says Consumers’ Crypto Concerns Must Be Addressed To Increase Adoption

Datavisor - Digital Fraud - April 2022 - A new look at consumers' growing interest in cryptocurrency and how users are navigating its unique risks

While most consumers have yet to purchase or use cryptocurrencies, they are interested in and aware of crypto, setting the stage for near-term growth as technologies supporting cryptocurrency transactions continue to mature. Some consumers see cryptocurrencies as a promising new investment asset that could even be used as collateral for loans, while others are interested in crypto because of the promise of greater security and privacy.

Despite that growing interest, most consumers do not understand cryptocurrencies very well, leaving them vulnerable to scams. Cryptocurrency fraud has added risks for consumers compared to other forms of electronic payment fraud, as transactions cannot be reversed and even regulators are limited in their ability to track the parties involved in a transaction.

As a result, realizing the full potential of cryptocurrencies will require consumers, providers and regulators to work in concert to promote security and reliability in the space. In the latest “Digital Fraud Tracker®,” PYMNTS examines the measures being taken to make cryptocurrency more secure and accessible to help drive mainstream adoption.

Developments From the World of Digital Fraud

A rise in both the number of reported scams and crypto-related inquiries at the United Kingdom’s Financial Conduct Authority (FCA) demonstrates the growing interest in crypto among consumers and a growing awareness of the risks involved. Three thousand of the 16,400 possible scam reports submitted to the FCA between April and September of last year were related to cryptocurrencies. In that same period, the use of the FCA’s ScamSmart Warning List for inquiries related to cryptocurrency fraud rose 49% from the previous six-month period. The ScamSmart tool lists purported investment opportunities that have been flagged as scams.

While concern over cryptocurrency scams may have risen among U.K. consumers, there has not been an accompanying increase in tolerance for overzealous fraud protections when conducting electronic transactions. Some of this may be related to consumers overestimating their ability to spot and avoid scams. Just 6% of U.K. consumers are concerned about authorized push payments fraud or being tricked into sending money to a scammer. At the same time, 19% said that the biggest irritation is when their financial institution (FI) blocks a transaction they have authorized, and 35% said that having an online transaction declined three or more times would lead them to consider switching providers.

For more on these stories and other digital fraud developments, check out the Tracker’s News and Trends section.

Wirex on the Maturation of Cryptocurrencies and Managing Risk

From crypto-linked debit cards to stablecoin cryptocurrencies pegged to existing fiat currency, the technologies enabling the use of crypto as a reliable means of conducting everyday transactions are on the rise.

In this month’s Feature Story, Tony Lees, chief product officer at crypto platform Wirex, talks about the unprecedented growth in use cases for cryptocurrencies that have accompanied efforts by providers and platforms to make them more accessible, as well as the misconceptions and fraud concerns that keep some consumers from engaging with crypto.

PYMNTS Intelligence: Addressing the Risks of Cryptocurrency as Interest Grows

Thirty-eight percent of consumers believe that cryptocurrencies will be widely accepted for everyday transactions within the next 10 years, and 86% are at least aware of crypto. Still, just 16% have ever purchased or engaged with a cryptocurrency. As that last number grows, the lack of familiarity with cryptocurrencies could greatly increase consumers’ exposure to fraud. Most cryptocurrency scams take a similar shape to other types of fraud, promising unrealistic returns or generally preying on human vulnerabilities rather than technological ones.

This month’s PYMNTS Intelligence looks at the role of providers, regulators and consumers in ensuring that cryptocurrencies continue to mature as transactional currencies while mitigating the risk of fraud.

About the Tracker

The “Digital Fraud Tracker®,” done in collaboration with DataVisor is your go-to monthly resource for updates on trends and changes in digital fraud prevention.