The Paypers: Donald Bush, Kount: "Merchants need to anticipate fraud"29-Jun-2015
Donald Bush, Kount: "Merchants need to anticipate fraud with a both thorough and flexible solution"
While mobile transactions increase, retailers do not keep up with the fraud prevention standards to deal with this high activity
Kount has recently published the third edition of the Mobile Payments & Fraud Report. Can you elaborate a bit more on the profile of the respondents, in matters of industry, size and geographic location?
The Mobile Payments & Fraud Survey 2015 Reporta was conducted from November 2014 to January 2015, and surveyed over 1,500 payments and/or fraud professionals worldwide. Respondents represented a variety of organizations within the payments ecosystem, including merchants, service providers, acquirers, card associations and issuers from organizations of all sizes, from those earning annual revenues of less than USD 5 million to companies earned more than USD 50 million per year in revenue. Merchants represented over half of all survey respondents, of which 59% have annual revenues in excess of USD 50 million. Merchants from more than 25 industries and 36 countries participated in the survey.
How much percent of merchants is able to detect that a transaction is coming from a mobile device and how many merchants are taking the next step to track and potentially treat fraud differently between mobile and web?
Within the merchant category, we saw a significant disparity in the ability to detect when consumers are transacting with mobile devices. About two-thirds of merchants with annual revenue less than USD 5 million per year are not able to tell if the transaction originated from a mobile device, while 64% of merchants with revenues of USD 50 million or greater have the ability to detect mobile transactions.
Looking at the sample as a whole, we are seeing that there is work to be done with mobile detection. Less than 40% (39.7%) of organizations surveyed can detect if a customer is transacting from a mobile device, and only 17% can determine the type of mobile device, showing that mobile fraud tracking is not a priority, despite the continued increase in mobile transactions and fraud. Just one-quarter (24.2%) of respondents think mobile requires specialized fraud tools, a decrease from 2013 (32.2%), which reveals mobile risk factors are still misunderstood by many businesses.
If a merchant can track whether a payment transaction is done via a mobile device or via the web, is he exposed to different fraud risks in the mobile channel compared to the traditional ecommerce?
Yes. Mobile does pose a greater risk to merchants, more than double the risk versus traditional ecommerce. Mobile transactions continue to increase, but retailers are not staying up to par with fraud prevention services to deal with this increased activity. While many merchants plan to add more mobile offerings to consumers – 37% of merchants plan to add mobile POS systems, 27% plan to add mobile apps for online shopping, and 18% plan to create dedicated mobile websites – almost 30% (28.4%) plan to add no additional tools or services to combat mobile fraud.
The FIDO (Fast IDentity Online) Alliance pushes for simpler and stronger authentication. Which methods of authentication do merchants find most or least attractive? Can biometric authentication be considered a practical solution?
The top five most common tools used by merchants for fraud prevention are ID authentication (38.2%), device ID (35.7%), secure mobile payment methods (30.5%) rules engine (26.6%), and fraud scoring (24%). Merchants were least likely to use AVS and modeling tools to combat fraud. Biometric authentication is a practical solution, and one that is growing in use. Depending on the type, biometrics are used in forms of ID authentication, which is already the most common fraud prevention tool used by merchants. The addition of facial or fingerprint recognition can help merchants verify their customers' identities in real-time to lower fraud rates. However, fraud evolves and it has been shown that fraudsters have been able to circumvent biometric authentication. Merchants need to make sure that they are anticipating fraud before it happens with a solution that is both thorough and flexible.
Which payment methods are most used in the mobile channel? Is security a factor that influences payment preference in this environment?
Consumers are using different payment methods for mobile transactions, but credit cards are the preferred method, used by 62.6% of respondents. Debit cards and PayPal are the next most popular, used by 14.5% and 13.5%, respectively, of survey respondents. Results also showed that payment methods varied when looking at different merchant categories – alcohol / tobacco customers are most likely to use debit cards (42.9%); financial services customers are the highest users of prepaid / gift cards (12.5%); and dating/social website users are most likely to use Bill2Phone offerings (16.7%).
About Donald Bush
Don joined Kount as the Director of Marketing in October 2010 and became Vice President of Marketing in December 2012. Prior to joining Kount, Don was the Director of Marketing at CradlePoint, a leading manufacturer of wireless routing solutions in the mobile broadband industry. Don has worked in several management roles within the technology segment for over 20 years with both hardware/software manufacturers and as a partner in two top technology marketing agencies.
Kount is an all-in-one SaaS platform which enhances fraud detection and enables online businesses accept more orders. Kount’s proprietary technology has reviewed hundreds of millions of transactions and provides protection for global brands. Merchants using Kount can accept more orders from more people in more places.