Kount has recently published the fourth edition of the Mobile Payments & Fraud Report. Which are the trends that have the most relevant impact on the industry and what do you notice after comparing the four years’ results?
a. Despite awareness that the mobile channel poses a greater risk than standard ecommerce, businesses are still taking a blanketed approach to their security strategies. Security is an essential part of the consumer experience. And as we saw with the rampant spread of data breaches, if organizations do not have a tailored strategy to manage fraud as it evolves in legacy channels as well as the mobile channel, they, and their customers, will be paying for it for years to come.
I. Over 82% of merchants actively support the mobile channel today, up from 54% at the time of the inaugural survey and 69% last year.
II. Mobile importance, acceptance and revenue has jumped: merchants earning at least 30% of revenue in the mobile channel more than tripled to 29% from 9% last year.
III. Companies big and small consider mobile ‘very important’ to growth: the share of merchants in the less than USD 5 million annual revenue range that consider mobile ‘very Important’ notably increased from 31 to 54%.
IV. Despite nearly half of card issuers (44%) and merchants with (41%) indicate that mcommerce ‘somewhat riskier’ or ‘far riskier’ than standard ecommerce, the mobile consumer experience trumped security concerns.
V. Despite the increase in mobile fraud risk over the years, the number of organizations considering it ‘very important’ to be able to detect mobile transactions only increased slightly since 2011 (from 39% to 42%).
Could you elaborate more on the profile of the respondents, in what concerns their size and geographic location, as well as experience in the industry?
a. We heard from merchants in every size business.
I. 30% - less than USD 5MII. 11% - USD 5M – USD 10M III. 11% - USD 10M – USD 25MIV. 8% - USD 25M – USD 50M V. 40% - USD 50M
b. Respondents were located in more than 22 countries including US, Canada, Europe, Australia and Asia.
c. More than 25 business categories are reflected in the report.
d. 82.4% of respondents have more than 3 years experience in ecommerce, 68.8% have more than 5 years in the industry.
Along with the growing support and acceptance for mobile wallets over the past three years, how many improvements have companies and organizations made in mobile risk management?
a. Unfortunately, relatively few. In fact, only about 42% of merchants can actually detect the type of device transacting with them, according to the survey. If a merchant does not know the type of device making a transaction, it leaves them blind to many characteristics and attributes associated with certain devices and leaves their fraud detection and management efforts short of effective.
b. 43% of merchants are unaware of the total amount of fraud coming from the mobile channel.
c. Too many merchants believe that their current systems are ‘good enough’ to catch and manage mobile fraud.
Our experience shows that this type of planning or strategy is not sufficient to detect and deter fraudsters working in the mobile channel.
What are the top tools and services that merchants use to combat mobile fraud?
a. For the second consecutive year, merchants are more likely to state that standard ecommerce fraud tools are sufficient to support risk management in the mobile channel.
b. While ID Authentication was the most common service for fighting mobile fraud for the past three years, a Rules-based approach took over the top spot this year for merchants.
c. The survey shows the following as top tools used by merchants.
d. 45% of merchants do not plan to add any tools or services to help reduce fraud in the mobile channel in 2016.
The deadline for the EMV switch is long gone, yet only one-third of merchants have an EMV terminal in the US. What do you see as being the leading causes for this problem and is the fear of fraud one of it?
a. I think the cost and complexity of implementation has caused most retail POS stations to remain unchanged and the slow pace of upgrading to new, EMV-capable POS terminals to be installed.
b. I do not think the fear of fraud is causing the delay, even though online merchants and merchants with online divisions of their business should be ready for increased CNP fraud.
c. Industry news not related to our study has shown the problems with processors/acquirers achieving the appropriate certifications have left many merchants without viable options. This has recently made its way to the courts and will be sorted out over many months or years.
In terms of online and mobile authentication methods, is biometrics among the preferred solutions by merchants in 2016 and will it give consumers the easiness and safety they need when shopping online?
a. No, it was not among the top tools.
b. Consumers may prefer the method but it is too early to determine if it provides the ease-of-use/safety that both merchants and consumers can fully rely on.
c. Biometrics may also pose a significant problem given the rampant rate of hacking and data breaches. There is serious debate about what will happen when biometric repositories are breached. The fallout will not be as simple as changing a password or receiving a new credit card. Biometrics are mostly permanent. Industry and consumers have a proven track record of not keeping secrets.
About Rich L. Stuppy
Rich L. Stuppy is the Chief Operations Officer at Kount. For more than a decade, Rich has been involved in developing fraud mitigation, compliance and big data strategies. In his role as Chief Operating Officer, Rich oversees the product roadmap, intellectual property portfolio, technical sales, service delivery and compliance. He works with executives from all areas of the payments ecosystem including merchants, acquirers, payment service providers, gateways, card brands and compliance officers to monitor trends, develop best practices and review policy.
About Kount
Kount is an innovator of solutions for fraud and risk management. The companys “decision engine” platform is ideal for managing fraud in online/telephone channels that process payments and onboard new customers. Kount is committed to offering an end-to-end, single-source solution focused on speed, simplicity and ease of use.
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