Mcommerce fraud costs merchants more every year

According to a report conducted by LexisNexis Risk Solutions, revenue that mobile commerce (mcommerce) merchants lost to fraud spiked 70% in 2014 to 1.36% compared to 0.80% in 2013. For comparison, all merchants lost 0.68% of revenue to fraud in 2014 in comparison to 0.51% in 2013.

Findings reveal that mcommerce merchants accept an average of 4.5 payment channels, significantly more than the 2.6 channels accepted by all merchants. Also, more than one-fifth (21%) of all fraudulent transactions are attributed to the mobile channel, which is disturbing due to the fact that the number of transactions occurring through mcommerce channels is still low for the average mcommerce merchant. In 2014, 14% of all transactions were accepted via mcommerce channels.

The results of the study show that customer identity verification is the top fraud prevention challenge for mcommerce merchants, followed by friendly fraud. The inability to confidently verify the identity of a customer and their device leads to friendly fraud, which is defined as fraud perpetrated by a family member or close associate. The study shows that 24% of fraudulent transactions are due to friendly fraud.