Retail Data Security Called Into Question

One of the obstacles online retailers have had to overcome to expand their businesses and reach a broader range of clients is establishing credibility. Handing over payment information to an unknown digital entity has made many consumers wary of the potential risks involved. Over time, some of those fears have been alleviated and ecommerce has flourished across the world. According to an eMarketer report, online sales across the globe surpassed $1 trillion last year. However, even with the strides that the ecommerce industry has made in cultivating customer confidence in recent years, there remain many doubts about the ability of online retailers to provide ample data security for their clients.

The Economist Intelligence Unit recently conducted a study on consumer attitudes toward the protection of personal data by companies from various industries. Respondents cited digital merchants as one of the least trustworthy enterprises regarding data security. Only 10.6 percent believe their data was "very secure" in the hands of online retailers. In contrast, banks and financial institutions were viewed in a much more positive light, with 41 percent of respondents ranking their data protection solutions as "very secure".

Smaller businesses may have more to lose from these trends. Javelin Strategy & Research's 2013 "Identity Fraud Report" found that small businesses experienced the worst negative impacts from data breaches, even when they occurred at another site. According to the study, 15 percent of identity fraud victims reported changing their shopping behaviors following their personal information being stolen. Specifically, respondents opted to avoid using the services of smaller online retailers because they were considered to be greater security risks.

In order to cultivate consumer confidence and ensure that security fears are not driving away potential customers, retailers should deploy a comprehensive security plan, including strong encryption methods. Using data encryption software, businesses can protect customer information from being accessed and misused by cybercriminals. With these tools in place, retailers can assure their clients that sufficient steps have been taken to protect their data.