New Study: Consumers Will Now Drop A Merchant Over A Single Data Breach

Consumers can drift along in a happy sort of haze, extending trust to brands that appeal, and enjoying a loose but very real connection — until a company lets data get stolen. New PYMNTS research indicates that merchants are more on the hook for data breaches than ever before — and it’s not some abstract government agency threatening fines: It’s way scarier. This time, it’s consumers.

PYMNTS’ May 2021 Securing eCommerce study, a NuData collaboration, surveyed a census-balanced panel of nearly 2,400 U.S. consumers about online shopping habits and feelings around touchy subjects like data security. Here’s the bad news: 65 percent of eCommerce shoppers “are likely to terminate their relationships with merchants after experiencing even a single instance of data theft or payment fraud,” per the study.

“Consumers expect their transactional data to be kept private, and they are unforgiving of merchants whom they perceive as responsible for data breaches and hacks,” and “even a single instance of fraud or data theft after a transaction” makes consumers defect to others.

The simple fact is that consumers are no longer tolerating data breaches, and they increasingly see merchants as the responsible party. Retailers are aware, and they’re getting very serious about clamping down on data theft.

An Online Surge Of Shopping — And Data Fears

Observing the massive digital shift that has occurred in shopping, the Securing eCommerce study notes that “this near-universal surge in online shopping is good news for eTailers, but there is a catch: data security anxiety. Consumers are growing more anxious about their personal data being stolen, and their unease grows more acute as they spend more time shopping online. Forty-eight percent of all consumers say they are more concerned about data security than they were before the pandemic began, but this figure is as high as 57 percent among consumers who are buying more online than they were before the pandemic.”

Researchers found consumers turning to trusted financial brands for their payment options, noting that 71 percent of eCommerce shoppers “report paying by entering their credit or debit card information manually at guest checkout, in fact. This works out to roughly 172 million consumers.”

Digital wallets are closing in, too, with 68 percent of eCommerce shoppers using PayPal, Google Pay and Apple Pay. “PayPal is far more commonly used than Apple Pay and Google Pay,” per the study, which noted that 60 percent of all eCommerce shoppers report paying via PayPal, while 29 percent pay using mobile wallets like Google Pay or Apple Pay.

Additionally, “68 percent of eCommerce shoppers say they like using their preferred payment methods because they are convenient and easy to use, and 59 percent say they prefer them for their speed.”

Payments Security Does Its Part

The Securing eCommerce study contains example after example of the new consumer mindset regarding who’s minding their data — or at least who they blame if something happens to that data. The onus is clearly on merchants, more than banks or even card networks, to get it right.

With consumers expecting and demanding data safety in transactions and beyond, the study finds that “eTailers must be able to provide money-back guarantees and make consumers understand the steps eTailers are taking to protect consumers’ personal data from fraud or theft,” adding that 37 percent of eCommerce shoppers prefer payment methods that assure them they can get their money if data thieves show up.

“Thirty-six percent say it is because these methods make them feel that there is a lower risk of their data being stolen and less risk of fraud. This serves as yet another reminder of how critical it has become for eTailers to win over their customers’ confidence on matters of data security,” the study states.