Mobile Enterprise: Merchants Must Ramp Up Security in a Mobile World29-Nov-2015
No matter where you look, statistics prove that mobile is here to stay and only continuing to grow. A ComScore study found that 78% of mobile searches for local business information result in a purchase, and the number of mobile transactions is expected to reach up to three quarters of a trillion dollars by 2017. Phone companies are catching on as well –- we’ve seen the release of several mobile wallets this year; Android Pay and Samsung Pay were both launched to compete with Apple Pay, which also expanded into the United Kingdom in 2015. Despite the increasing reliance on and movement toward mobile among industries, merchants are still lagging behind in mobile optimization and security.
A recent study from Kount, The Fraud Practice and CardNotPresent.com, “Mobile Payments & Fraud: 2015 Report,” found that less than 40% (39.7%) of organizations have the ability to detect if a customer is transacting from a mobile device, and only 17% of organizations can determine the type of mobile device. As merchants seek to maximize revenues through mobile channels, they must put the right tools in place to prevent fraud and realize the challenges that come along with mobile commerce. The cost of fraud on mobile is high — $3.34 in hidden costs for every dollar of fraud compared to $2.62 for online fraud. So why aren’t retailers optimizing security for mobile checkout processes?
Due to the increased amount of new payment options (mobile wallets), technologies (EMV), and volume of transactions, many merchants are overwhelmed by the new methods that consumers are using to pay, and perplexed by the best way to combat fraud for each. In fact, according to the above study, managing the complexity of new payment types was the biggest obstacle to mobile adoption this year (20%).
Retailers can combat these challenges by first (and most importantly) being able to identify through which avenue payments are being made. A smart plan of attack is to implement a comprehensive fraud strategy that is customized to your own specific business and uses multiple tactics in real time. These tactics include analytics, scoring, device data, product based rules, behavioral monitoring, and geographic analysis. The best possible system will use this data in both machine-learning and rules-based systems, which gets the most value of the data while giving the merchant complete control.
Once a fraud system is in place, there are several ways for merchants to stay on top of mitigating fraud, which includes being on the lookout for common tactics criminals tend to use. One of these methods is “card testing,” which is when a fraudster runs multiple transactions on one card as they try to validate stolen cards. Another sign that fraudulent transactions may be in progress is if multiple transactions from different cards are coming from one single IP address. Having a fraud strategy in place will help merchants gain access to all of these data points and make it easy to identify and prevent risky transactions.
Mobile adoption, as well as the technologies designed to keep pace with increased mobile use, will continue to evolve, constantly creating new weaknesses on which fraudsters can prey. Along with conducting thorough reviews of your payment and fraud systems regularly, merchants need to make it a priority to have the right tools in place that can detect and predict fraud before it happens, allowing more legitimate transactions to go through, and stopping fraudulent ones in their tracks.
Donald Bush is vice president of marketing for Kount, a provider of fraud detection and sales boosting technology.