Kount > Digital download websites must balance the risks and benefits of mobile commerce

Digital download websites must balance the risks and benefits of mobile commerce

21-May-2015

Boise, USA / London, UK May 21, 2015 - Digital download websites are enjoying the benefits of mobile commerce – and many are ahead of the average online merchant when it comes to balancing the opportunities and risks that m-commerce brings.

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 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.

More than half (57.4%) of respondents from the digital downloads sector said a mobile strategy was very important to their future growth, while 33.3% said it was somewhat important.

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. Digital goods websites 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%).

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

Asked how consumers preferred to pay via their mobile device, 62.6% of all merchants named credit cards, 14.5% debit cards and 13.5% PayPal. Among digital goods websites, 61.1% cited credit cards, 14.8% debit cards and 13% PayPal.

The biggest obstacle to mobile adoption, said 27.8% of all respondents to the study, was the need to make it easier for consumers to transact. This rose to 30.4% among websites selling digital goods. Other barriers included the complexity of new payment types, named by 13% in the digital downloads sector. Working out how to manage the fraud risk was a challenge for 17.4% of businesses from this sector, while 21.7% named consumer security concerns as a barrier to mobile adoption.

Across all respondents to the study, 11.3% said addressing the fraud risk was one of their biggest challenges – down from 20.1% the previous year. That appears to suggest that fraud risks are less of a priority for merchants.

More than a third (39.4%) of merchants said they were tracking fraud by channel, but 34.2% were uncertain whether they were. Meanwhile, most respondents (61.0%) 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 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. But he said there was still work to be done. “To successfully support the growth of mobile, organisations 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.

Of the almost 1,500 people questioned for the study between November 2014 and January 2015, 51.3% were from merchants. Of those 12.4% represented websites in the gaming sector.

About Kount
Kount helps businesses boost sales by reducing fraud. Our all-in-one, SaaS platform simplifies fraud detection and helps online businesses accept more orders. Kount’s turnkey fraud platform is easy-to-implement and easy-to-use. Kount’s proprietary technology provides maximum protection for some of the world’s best-known brands. Merchants using Kount can accept more orders from more people in more places than ever before. For more information about Kount, please visit www.kount.com.

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