83% of Financial Firms Rate ID Systems Highly Despite Customer Friction

Your lenders might be happy with their security systems, but your customers likely aren't. A new report shows a major disconnect between how financial institutions view their identity verification (IDV) tools and the actual friction those tools cause during the checkout process. While 83% of firms rate their systems highly, the reality is that many legitimate customers are getting caught in the net. For retailers, this means that even if a customer is credit-worthy, a clunky 'bot-prevention' step could cause them to abandon their financing application entirely. The rise of AI-driven fraud has forced lenders to tighten security, but this often leads to 'false positives' where real shoppers are flagged as suspicious. If you offer consumer financing or Buy Now, Pay Later (BNPL) at the point of sale, this friction directly impacts your conversion rates. The report highlights that while firms are confident in their ability to stop bots, they are struggling to balance that security with a smooth user experience. As a merchant, you should be asking your financing partners about their 'pass rates' and how they are leveraging automated identity verification to reduce manual reviews. The goal is to ensure that security measures happen in the background rather than forcing the customer to jump through hoops that kill the sale.

Source: PYMNTS

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