Are Retailers Truly Ready for the Mobile Surge?
Late last year Kount sponsored a survey designed to get a pulse on mobile fraud, or more specifically, how retailers and payments experts felt about the threat of fraud on this surging payment channel. We recently released the results of the Mobile Fraud Survey, which you can download here. While surging sales trends balanced by the limited percentage of overall revenue held true to many other mobile payment reports we’ve seen, we were stunned to see the minimal to non-existent fraud protection in this channel.
Put simply, fraud follows opportunity. While nearly 85% of those we surveyed considered mobile somewhat or very important to their business growth, and more than 76% believe it is at least as risky or riskier than current e-commerce channels, 55% of merchants cannot detect whether a transaction originates from a mobile device. By not having this simple capability in place, retailers are simultaneously restricting their fraud protection and jeopardizing the overall customer experience.
Beyond that stunning feedback, additional eye-opening results include:
- 20% of merchants with annual revenues between $10 and $25 million consider managing fraud risk the biggest obstacle while less than 2% of the largest merchants surveyed (many of which have a solution in place) consider this a problem
- Only 17% of smaller merchants (annual revenue less than $5 million) are currently using a complete fraud platform, compared to more than a quarter of merchants with annual revenues greater than $50 million
- Only 11% of merchants are using device identification for mobile fraud prevention, compared to 45% of service providers, 40% of card issuers and half of the acquirers and card associations
- 32% of respondents have implemented ID authentication and secure mobile payment methods, 29% are using rules and 23% use an address verification service
It seems the focus is exclusively on growing the mobile channel without protecting the business against those who steal for a living. These efforts are not mutually exclusive parts of a mobile business strategy. A comprehensive fraud solution not only minimizes your risk, it enables you to grow your business by learning more about each transaction, where additional opportunities are by channel and across the globe as well as who your customers are. More importantly, you are not dedicating additional time and resources to solving a fraud problem that is escalating costs and derailing revenue.
For me, one of the most surprising aspects of the survey is that a merchant who implements a comprehensive fraud solution can easily set themselves apart from their competition. As you minimize risk and confidently grow your business without worrying about manual transaction reviews and chargebacks, others will be scrambling to recover. That alone should motivate you.