New Study: Merchant Choice Driven By Trust, With Size And Scale Playing Vital Roles

Dig into the psychology of trust and we find that in human relationships it’s often extended based on gut feelings and other intangibles. That doesn’t cut it in a remote digital world, so where fallible instincts end, artificial intelligence (AI) and rich data begin their work.

For the May 2021 study, The Trust Quotient: How Merchant Trust Drives Shopping Behaviors, a Sift collaboration, PYMNTS researchers surveyed nearly 2,600 consumers seeking to understand how trust in different merchant types impacts consumer patience for security-related frictions.

In a telling finding, the study notes, “Most consumers shopping with small merchants for the first time … said they wanted retailers to protect their data, even if doing so added friction to the checkout process (84 percent). Consumers were less likely to want this protection when shopping with familiar merchants (those with whom they had made multiple online purchases over the past 12 months) and with large merchants that were new to them… at 79 percent and 75 percent, respectively.”

Merchant size and reputation clearly play a major role in consumers’ perceptions of digital safety, but there’s far more to it as we find in The Trust Quotient.

Digital Trust By The Generational Numbers

As more measures of digital trust are taken, a picture is emerging of demographic cohorts and the preferences among them for what’s acceptable pushback to secure a given transaction.

The new Trust Quotient study finds that “baby boomers and seniors [are] the age group most willing to tolerate friction during a transaction to protect their data with new large merchants (89 percent), new small merchants (90 percent) and familiar merchants (87 percent).”

However, millennials “were the least likely age group to agree that a merchant ‘should do whatever it takes to protect data’ when shopping with new large merchants (67 percent), new small merchants (72 percent) and familiar merchants (72 percent). The next least likely were bridge millennials, at 68 percent, 78 percent and 72 percent, respectively.”

The upshot is that trust in a merchant (or lack thereof) is deciding more and more retail outcomes. The study notes that 45 percent of consumers “listed their trust of familiar merchants and 43 percent cited their trust of new large merchants as their reason for lacking interest in new security measures.” PYMNTS researchers also found that 34 percent of customers believed their bank will correct problems that arise with new small merchants.

In Digital Retailing, Loyalty Doesn’t Equate To Exclusivity

While large and familiar merchants performed well in this exhaustive study of consumer trust, study after study in the pandemic finds that loyalty is fragile — easily lost and hard to regain.

Finding that nearly 60 percent of consumers “loyal” to one merchant have utilized another in the past 12 months, the study shows that folks are trying new merchants regardless of loyalties.

Per the Trust Quotient study, “This willingness to try new merchants may be related to customers’ comfort levels with specific merchant types. Affluent consumers (earning over $100,000) indicated they were among retail’s most engaged customers, for example, reporting high levels of trust regarding their security when shopping with new large merchants (52 percent). Affluent customers were also among the most likely to have made a purchase from a large merchant in the last 12 months (64 percent).”

It makes sense, as the study observes that willingness to trust a “chosen merchant” with card data shows why some shoppers feel safe enough to forgo tighter transaction security to complete a transaction quickly. This is well illustrated by the finding that millennials want security but are “less tolerant of the inconvenience that checkout friction may cause.”