What's Happening?
A recent report by Tink Research highlights that UK small and medium-sized enterprises (SMEs) lost approximately £6.15 billion in sales last year due to consumer distrust of manual bank transfers. The study, conducted with the Centre for Economics and Business Research, surveyed 2,000 consumers and 500 SME leaders, revealing a significant disconnect between business practices and customer expectations. Despite 87% of SMEs relying on manual bank transfers, 41% of consumers would abandon a purchase if asked to pay this way. The report also notes a £450 million loss to authorized push payment fraud in 2024, further fueling consumer caution.
Why It's Important?
The findings underscore the critical impact of payment security on consumer trust and business revenue. As fraud fears rise, consumers are increasingly cautious, affecting sales and customer loyalty. This situation presents a challenge for SMEs, which must adapt to secure payment methods to maintain competitiveness. The adoption of open banking and secure payment alternatives like Pay by Bank could help restore consumer confidence and protect revenue streams. Businesses that fail to address these concerns risk losing sales and damaging their reputations.
What's Next?
With open banking adoption reaching 15 million users in the UK, SMEs are encouraged to transition to secure payment methods to mitigate fraud risks and improve customer trust. Tink, as part of Visa A2A, is working to enhance protections for Pay by Bank payments, aiming to offer security comparable to card transactions. This shift could lead to increased consumer confidence and improved business conversion rates.
Beyond the Headlines
The broader implications of this trend highlight the evolving landscape of consumer expectations around payment security. As digital transactions become more prevalent, businesses must prioritize secure payment options to meet these expectations and avoid potential losses. This shift may also influence regulatory measures and industry standards around payment security.
