PaymentsSource: Merchants Warm to Mobile Payments, but Fraud Fears Linger


Merchants who in recent years viewed mobile payments as experimental now say they consider the technology vital in e-commerce, even though many remain concerned about fraud.

"Merchants knew mobile was coming, but I don't think they realized how hard and fast it was going to come at them," says Don Bush, vice president of marketing at Kount Inc., a fraud prevention technology provider.

On average, the mobile channel accounts for 20 percent of a merchant's business, twice as much as what merchants reported in 2013, according to a report Boise, Idaho-based Kount published this week based on a survey of more than 2,000 merchants from November 2013 through January 2014.

Of those surveyed, 66% say they now actively support mobile channels, an increase of 30% from the previous year, while merchants who offer a mobile app for online shopping more than doubled from to 54% from 21%. Nearly half of the respondents say they offer consumers a dedicated mobile website.

Half of the respondents identify as global merchants and more than half reported annual revenue exceeding $50 million.

As part of a transition to mobile, merchants want to learn about fraud protection, and what type of payments they should accept, Bush says. The number of merchants viewing mobile as riskier than standard e-commerce rose to 32% in the 2014 survey from 24% a year earlier.

Kount views device detection as a key factor in keeping mobile payments secure. The survey indicates nearly 90% of merchants agreed, saying it is important to know the origin of a mobile transaction being accepted online.

"But the next question we asked was whether they had the technology to know the origination of a transaction, and that number dropped to 50%," Bush says.

It is a "dangerous proposition" for a merchant to accept mobile transactions and not be aware of origin, Bush says. "Fraudsters try to mask things," he adds. "They want you to think the payment is originating in Idaho, but they may actually be in Vietnam."

These fraud concerns do not deter merchants from using mobile technology for marketing, loyalty and payments, says David Montague, president and executive consultant for Fraud Practice LLC, which aided in conducting the survey.

Montague was mostly impressed with the number of merchants moving forward with mobile, rather than waiting. "The number of merchants reporting more than 20% of revenue through mobile was a really big jump, more than I expected," he says.

From a technology standpoint, mobile payment acceptance is still "the wild, wild West out there," Montague says. "Everyone is coming in and trying to be the key player."

But merchants aren't concerned at this point as to which mobile payments technology will be most widespread, Montague says. "They know the consumers will obviously make that decision."

By David Heun at
Mar. 20, 2014