News Feature | March 13, 2014

Merchants Call For More Mobile-Specific Fraud-Prevention Measures

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By Anna Rose Welch, Editorial & Community Director, Advancing RNA

Mobile-Specific Fraud-Prevention

As mobile becomes more prominent, merchants grow increasingly fearful of fraud 

There’s no doubt that the mobile channel has begun to grow more important for retailers. However, as merchants begin to invest in mobile, their concerns about fraud and security are also increasing. According to the 2014 Mobile Payment and Fraud Survey by Kount, “Not only are organizations now more likely to find that fraud risk associated with the mobile channel is higher than with standard web e-commerce, but organizations are also more likely to believe the mobile channel acquires additional tools for managing risk.”

For the merchants surveyed, the mobile channel has begun to play an increasingly larger role in business. This year, mobile accounted for 20 percent of the merchants’ businesses — double that of last year. The percentage of merchants now supporting mobile has also increased by 30 percent year to year, reaching 66 percent. It seems that businesses are turning to the app as an important way to get consumers engaged with mobile in the midst of shopping. Now, 54 percent of merchants offer a mobile app for online shopping — an impressive jump from only 21 percent last year. Similarly, nearly half of merchants have begun to offer a dedicated mobile site to provide a mobile-friendly shopping experience for guests.

However, while the mobile channel is opening up new opportunities for consumer access and revenue growth, businesses are also aware that this channel creates challenges. The study shows that 32 percent of merchants surveyed believe that mobile commerce is riskier than standard e-commerce. This percentage has grown from 24 percent of merchants surveyed last year. In order to best protect themselves from fraud, merchants are finding it necessary to invest in fraud processes that are more catered to mobile commerce rather than standard e-commerce. Indeed, the percentage of merchants that believe standard e-commerce fraud processes are enough for managing mobile channel risk has fallen from 37 percent to 26 percent this year. Thirty-two percent of merchants say that fraud protection specific to mobile is necessary — a sentiment that has nearly doubled since last year.

Because the businesses surveyed all vary in terms of sector and revenue size, they therefore have unique needs in terms of fraud prevention tools. However, being able to detect a mobile device was a fairly common desire among merchants. More than half surveyed found the ability to detect a mobile device “very important,” and 89 percent considered it at least “important” or “somewhat important.”

As Don Bush, VP of marketing at Kount, says, “Clearly mobile commerce is a source of tremendous opportunity for online retailers and their focus on this channel has grown considerably each year. Merchants also realize that fraud allows opportunity, and there may be no greater opportunity for fraud today than in mobile. Protecting and growing your business requires a fraud solution that integrates with all mobile platforms without any impact to the customer experience or your business.”

Read: Retailers Need More Than Mobile Device Management