M-commerce Fraud Wanes in Focus for Merchants

Digital download websites are enjoying the benefits of mobile commerce—and many feel they’re ahead of the average online merchant when it comes to balancing the opportunities and risks that m-commerce brings. As a result, fraud is waning as a focus, according to a recent study: Just 11.3% said addressing the fraud risk was one of their biggest challenges—down from 20.1% the previous year.

In the third-annual Mobile Payments & Fraud: 2015 Report, commissioned by Kount, the Fraud Practice and CardNotPresent.com questioned nearly 1,500 fraud and payment professionals representing merchants, fraud and ecommerce service providers, card issuers and card associations.

It found that more than a third (39.4%) of merchants said they were tracking fraud by channel, but concerningly, 34.2% were uncertain whether they were. Meanwhile, most respondents (61%) were uncertain whether fraud was increasing in their mobile channel; 4.8% said it was decreasing, and 13.2% said it was increasing.

Asked how risk in the mobile channel—millions are lost every year—compared to other channels, 34.8% of those working in digital goods said it was somewhat riskier, and 56.5% said it was just as risky. Only 6.5% said it was far riskier.

Don Bush, vice president of marketing at Kount, said digital goods merchants appeared to be somewhat ahead of the crowd of online traders on mobile adoption and fraud protection. Websites said that they used a variety of methods to protect themselves from mobile-specific fraud, including device ID recognition (36%), secure mobile encryption (36%) and mobile geolocation (28%).

But he said there was still work to be done. “To successfully support the growth of mobile, organizations must first ensure IT departments are talking with fraud teams to understand the risks and rewards, or mobile fraud will grow to a bigger issue in the coming years,” he said in a statement.

About 12.4% of respondents represented websites in the gaming sector, which is a popular target for cyber-criminals and hackers, as evidenced by the recent Grand Theft Auto V attack. More than a third (34.6%) of respondents from this sector said that it was very important to detect whether visitors were transacting on mobile, while half (50%) said it was somewhat important.

But taking gaming as just part of the m-commerce universe, just how big a target surface are we talking about, you may ask?

The survey found that the number of merchants actively supporting mobile commerce continues to climb, with 68.7% of all merchant respondents now doing so and a further 20.5% planning to support it from this year.

Last year 63.6% supported mobile, and 24.7% planned to do so this year. Most (89.1%) say the channel is very or somewhat important for their growth plans, up from 83.5% last year.

Among those representing websites that sell digital goods, 77.8% of websites said they actively supported mobile already, and 14.8% planned to do so in 2015. Asked what proportion of their sales came from mobile, 24.1% of respondents from the digital downloads sector said it was between five and 10%, and the same percentage said it was between 10 and 20%.

Only 3.7% said they earned more than half their revenue via mobile devices, but 13% said they expected to within two years, while 31.5% said they expected to earn between 20% and 30% of revenue through mobile devices by then.

“The mobile channel provides tremendous opportunities but also great risks,” said Don Bush, vice president of marketing at Kount. “Merchants need to remember that in order to benefit from mobile commerce they must adopt mobile specific anti-fraud tools.”

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