Executive Summary

The Trust Gap Merchants cannot
afford to ignore

Identity and Fraud Insights for Merchants in 2026

Source: Experian 2025 Identity and Fraud Report, Merchant Edition

Consumers are spending more time online and losing confidence in the platforms meant to protect them. Payments companies have quietly cracked the trust problem. Most retailers have not. This summary covers what the data shows and what it means for merchants navigating fraud, checkout friction, and the loyalty of a generation that grew up online but still cannot spot a scam.

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The numbers that frame everything

2.5 billion

Lost to fraud in 2024, a record high according to the Federal Trade Commission.

83%

Of consumers report some lifetime usage of P2P payment apps. Payment providers have been the most trusted digital category for five consecutive years.

43%

Of shoppers prefer guest checkout, and 72% of those still use it even when they already have an account.

95%

Of fraud victims experience emotional distress, including anxiety, shame, and depression, per the Identity Theft Resource Center.

Consumer priorities

Security and privacy beat convenience. Every year. No exceptions.

When consumers rank what matters most to their online experience, the results have been consistent for four consecutive years. Security and privacy dominate by a wide margin, followed by convenience and then personalization.

What matters most to consumers in their online experience

  • 85% Security
  • 84% Privacy
  • 60% Ease of login
  • 56% Ease of sign-up
  • 50% Ease of accessing a service
  • 56% Receiving personalized offers
  • 51% Receiving online conveniences

The trust gap by
category

Who is earning trust, and who has the widest gap to cover?

When consumers rate their trust in specific businesses to address security and privacy concerns, the scores range from 14% to 25%. The expectation of protection, however, runs far higher for most categories. The gap between what consumers expect and what they believe they receive is where merchant vulnerability lives.

Consumer trust score vs. Importance of protection, by platform type

Segment Trust score Protection importance Gap Insight
P2P Payment Apps 28% approximately 22% +6% favorable The only category where consumers trust the company more than they expect to need protection from it.
Payment System Providers 25% approximately 20% +6% favorable The only category where consumers trust the company more than they expect to need protection from it.
Ecommerce Marketplaces 25% approximately 25% Neutral Meeting expectations and the fifth-most-used category in the past six months.
Retail Banks 24% approximately 30% Shortfall High importance, moderate delivery.
Branded Retail Sites 18% above 30% more than 30% The widest trust gap in the entire study. Consumers ranked branded retailers second-highest in importance of protection, after government agencies, yet trust delivery is among the lowest.
Online Gaming Sites 15% approximately 30% more than 30% Significant consumer skepticism with similarly low trust delivery expectations.

Why payments won

P2P apps rank first in enhancing the online experience. Retail apps rank second. The difference is trust delivery.

Consumers ranked 16 P2P payment apps as the single biggest contributor to a better online experience, cited by 58% of respondents. Retail apps followed closely at 56%. Yet when it comes to whether those retailers are actually protecting consumers, the gap opens wide.

Consumers are also willing to transact with an unfamiliar merchant when a recognized payment provider is present. This behavior has been consistent since 2022. The trust is not in the merchant. It is in the payment layer sitting between them.

How Banking and Payment tools enhance the online experience

  • 59% P2P payment apps
  • 56% Retail app
  • 54% Mobile wallets
  • 43% BNPL options
  • 48% Service provider payment app
  • 42% QR codes for payment
  • 41% Subscription-based payment options

Guest checkout and
Account friction

Consumers want to be recognized. They do not want to re-register.

While 40% of consumers say they have opened a new account with a retailer in the past six months, the reality is more nuanced. Among 18 to 24-year-olds, 20% could not recall whether they had, a sign that onboarding is either so seamless it is forgettable or so optional it is being bypassed altogether.

Account Creation Abandonment Over Time

2023

51% considered abandoning

37% followed through

2024

36% cited friction as a reason to abandon

18% followed through

2025

40% considered abandoning

25% followed through

Among high-income earners, that number jumps to 32%. Among 25 to 34-year-olds, it jumps to 45%.

The false decline risk

When merchants lack identity signals at guest checkout, the cost is not just friction. Poor verification turns away legitimate customers. Every false decline is a lost sale, a damaged relationship, and a customer who may not return. Tools that accelerate checkout, passive identity verification, and behavioral analytics now allow merchants to recognize and assess fraud and identity risks without requiring login credentials or personally identifiable information.

For merchants, this means:

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Using biometric and device intelligence to verify identity invisibly.

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Leveraging behavioral signals to detect fraud in real time.

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Offering post-purchase incentives to convert guests into loyal customers.

Authentication preferences and security perception

Consumers trust biometrics more than they trust passwords. Merchants are slow to catch up.

Which authentication methods make consumers feel most secure

  • 76% Physical biometrics (ranked first for the fourth consecutive year)
  • 72% Behavioral biometrics
  • 56% Passwords
  • 50% Contact information
  • 48% Account usernames

What merchants are actually deploying

Of surveyed merchants, 50% report using secondary devices to verify identity, higher than any other vertical, while 35% are using behavioral signals, which is 15 percentage points above the cross-industry average of 25%. All merchant respondents plan to increase their fraud budgets, with the majority targeting 6% to 10% growth and 37% planning double-digit increases.

Gen Z: The highest-risk,
highest-opportunity segment

The generation most active online is the least aware of what's coming for them.

Despite being digital natives, 18- to 24-year-olds are the least aware of online scams and the most likely to say they have no concerns about fraud.

  • 3 times more likely to select no concerns when asked about online security, and the most likely to interact with it.
  • 14% report zero awareness of online scams, the lowest figure of any age group surveyed.
  • More than twice as likely as boomers to experience digital security breaches, including hacked social media accounts, identity theft, and falling for online scams, per Deloitte's 2024 Connected Consumer survey.
  • Nearly one-third of Gen Z respondents reported having a social media account hacked in the past year.

Top consumer fraud concerns in 2025

The threats consumers are most afraid of are the ones merchants can directly address.

68%

Identity theft

The top security concern for payment survey. Identity theft shapes how consumers approach checkout, trust new tech, and why in the single most important threat for merchants to treat first and mostly address.

61%

Stolen credit card information

The second-highest concern and directly relevant to merchant checkout flows. This is addressable today through passive card verification tools that match payment card numbers to consumer identity attributes without requiring additional input from the buyer.

31%

Deepfakes and AI-Generated fraud

The second-highest concern and directly relevant to merchant checkout flows. This is addressable today through passive card verification tools that match payment card numbers to consumer identity attributes without requiring additional input from the buyer.

How merchants are
responding

The fraud budget is growing. The investment priorities need to catch up with the actual threat map.

Merchants are facing intensifying fraud threats and beginning to respond with sharper focus and smarter tools. Account takeover and transactional payment fraud are top concerns, with half of surveyed merchants reporting both as areas of increased stress and active investment for 2025.

Top merchant fraud investment areas for 2025

  1. 1

    Account takeover

    Reported by 50% as a top stress area and active investment.

  2. 2

    Transactional payment fraud

    Tied with account takeover at 50%.

  3. 3

    Secondary device verification

    Used by 50% of merchants, more than any other vertical.

The blind spot: new account fraud

Merchants reported the highest rates of new account opening fraud of any category in the study, yet it ranks 15th on their active investment list for 2025. The gap between highest-reported problem and lowest-prioritized solution is the clearest misalignment in the merchant section. Protecting account creation does not have to be friction-heavy. Invisible, intelligent tools can secure the journey without slowing it down.

Six takeaways for merchants

What the data is actually asking you to do.

1

Follow the payment providers' lead.

They are the only category consistently on top. Consumers believe that their passwords are protected with them. Prioritize invisible verification, recognition-over-interrogation flows, and trust checkout. Consumers who feel recognized buy more, and they recommend loudly.

2

Stop fighting guest checkout. Optimize it.

>When it comes to guest checkout, 43% of them when they already have an account. The answer is not to force account creation. The answer is frictionless verification. Guest checkout is not a bug in loyalty. It is an opportunity. It is a test of your technology stack.

3

False declines cost more than you are accounting for.

Without identity signals at guest checkout, real customers get turned away. Passive verification closes this gap without delaying friction. The cost of underverification is not just fraud losses. It is lost revenue, damaged relationships, and customers who do not return.

4

Behavioral analytics are underused and undervalued.

They are the only category consistently on top. Consumers believe that their passwords are protected with them. Prioritize invisible verification, recognition-over-interrogation flows, and trust checkout. Consumers who feel recognized buy more, and they recommend loudly.

5

New account fraud is underfunded relative to its actual cost.

When it comes to guest checkout, 43% of them when they already have an account. The answer is not to force account creation. The answer is frictionless verification. Guest checkout is not a bug in loyalty. It is an opportunity. It is a test of your technology stack.

6

Build for Gen Z now, before urgency forces your hand.

They are overexposed, underinformed, and your future customer base. Protecting them proactively builds the kind of loyalty that content any single transaction. Businesses that can protect and gain the trust of future consumers without increasing their reliance on personally identifiable information may win a significant payoff.

YOU CAN FIND THE FULL EXPERIAN REPORT HERE