My colleague and I, both payments experts, find that we disagree about the safest way to buy things online. Without getting into the details, it all comes down to whom we trust. We've got the facts, which we combine with our perceptions and experiences. Then, we come to different conclusions about what we trust most.
It makes sense that our ideas about trust differ because trust is such an amorphous concept. At the same time, trust is essential for human relationships and for government and commercial enterprises. Trust underpins optimism, willingness to take a chance, belief in another's good intentions. Trust underpins payments. In The Story of Payments
, Rich Oliver and George Warfel Jr. write, "Trust is at the heart of payments, whether the payment instrument being trusted is a dollar bill, a check, or a mobile phone text message."
You probably know that trust in government and businesses generally has declined over the last 50 years. And trust in financial institutions goes up and down with the economy. For example, confidence in banks dropped around 2009, with trust recovering since then. Trust also varies from one person to the next, with willingness to trust associated with income and demographic characteristics, including, age, race, and education, as well as unobservable personality differences.
Societal trends, the health of the economy, and each person's characteristics are outside the control of a product designer creating a new user experience layer for a prepaid card or a fintech CEO seeking to establish a relationship with prospective customers. So how to build trust? One strategy—building familiarity—appears to encourage a trusting relationship between payments provider and customer, between payee and payer. Among survey respondents who called financial institutions untrustworthy in a 2021 survey, lack of familiarity was a prime reason. The Federal Deposit Insurance Corporation (FDIC) in 2016 found similarly that lack of familiarity with banking products and services underpins distrust. This connection is not limited to the United States; a survey of Dutch consumers had the same results.
In the FDIC Survey of Unbanked and Underbanked Households, about one-third of households without a bank account cited distrust of banks as their reason for not having an account, the second-most-cited reason after "lack of money." More recently, the Atlanta Fed's Special Committee on Payments Inclusion 
pointed out that lack of knowledge prevents some people from seeing the benefits of using digital payment systems. Instead, they see digital risks and do not trust that their money and information will be safe.
Decades of research show that lack of trust is not limited to one group or segment of society. Building familiarity with financial concepts and tools can give all of us—me, my colleague, you, your friend who wants to pay only in cash—the openness to new ideas and the knowledge we need to participate fully in the digital economy. Currently, 25 states require students to take a personal finance course before graduating high school. What's happening with the other 25?
Last year, the Office of the Comptroller of the Currency (OCC) collected public comments as part of preparing an annual survey "to understand consumer trust in banking and bank supervision." In its request for comment, the OCC states, "Without trust, banks cannot attract or retain customers, including depositors, or meet the credit needs of the communities they serve" (Federal Register June 9, 2023 ). I eagerly await the outcome.
By Claire Greene, payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed