Is Mobile Fraud Growth Outpacing Mobile Revenue?
Is fraud getting worse in your mobile channel? Perhaps the only answer worse than “Yes” to that question is “I don’t know.” Why?
MBA schools teach future managers and executives to use the pictured Knowledge and Awareness matrix to assess risk.
Risk rises as you move up and to the right of the matrix. When you know what you know (lower left), risk is lowest. When you don’t know what you don’t know (upper right), you could be in for some ugly surprises. Ominously, more than 4 out of 10 online businesses find themselves in the upper right, highest-risk quadrant when it comes to awareness about mobile commerce and fraud.
According to the Mobile Payments & Fraud: 2017 Survey, 42% of online merchants are not sure whether mobile fraud grew or shrank relative to their total volume of mobile transactions. Consider that finding in the context of the 40% who said they believe that mobile fraud is increasing, and the 70% who thought that standard eCommerce fraud prevention processes weren’t enough to fight mobile fraud. This seems like a dangerous mix.
At the same time, the percentage of online businesses who thought mobile commerce was riskier than conventional eCommerce fell for the third year in a row, to its lowest percentage ever: a combined 25.1%.
What’s behind this apparent paradox? One possible reason is that even as merchants have gained more and more visibility into mobile transactions–more than 85% can detect when a mobile device is being used—reporting about fraud rates and sales volumes is not yet fully separated into distinct channels. Thus, data about conventional eCommerce and mobile commerce gets blended into an undifferentiated pool, making it difficult to accurately compare fraud versus revenue by discrete channel.
Another theory is that mobile fraud simply isn’t of paramount concern because higher dollar fraud is more likely to come from connected devices like desktops. Consumers spend 70% of their retail time on mobile, but only 20% of their dollars. Conversely, consumers spend only 30% of their retail time on desktops, but 80% of their dollars. The thinking is that the lower dollars at risk in mobile transactions allow merchants to somewhat overlook this issue.
Yet another trend that could explain this seemingly contradictory data: the growth of mobile apps. By a margin of more than 2 to 1, online merchants responding to the Mobile Payments & Fraud: 2017 Survey thought mobile app transactions were less risky than browser-based mobile transactions. It may be that these merchants who are deploying mobile apps that they consider less risky are influencing the findings.
What’s your situation? Do you know if mobile fraud is increasing relative to mobile revenue? With mobile commerce slated to double by 2020, the goal of every Risk Manager and Fraud Analyst should be to move down and to the left quadrant of the Knowledge and Awareness matrix.
A great place to start is by downloading the Mobile Payments & Fraud: 2017 Survey. With data from over 800 merchants—sliced and diced by market segments—as well as more than 60 charts and tables, it provides valuable insights into the state of mobile commerce and fraud today.