BOISE, Idaho -- A new survey has found that merchant awareness is not keeping pace with mobile fraud growth, and the support for the mobile channel is not meeting predictions and expectations.
In addition, concerns over the implementation around new payment methods such as Apple Pay have risen. And while new tools are available to merchants to meet increased fraud, there is very little consistency in adoption of these tools across industries.
Conducted for the third consecutive year by Kount Inc., CardNotPresent.com and The Fraud Practice LLC, the 2015 Mobile Payments & Fraud Survey analyzes fraud and the mobile channel, uncovering trends in payments, new-technology adoption and fraud prevention strategies.
“The data shows that the industry as a whole is further behind on mobile adoption and fraud protection than they were a year ago, and in fact, some are even pulling back from it,” said Don Bush, vice president of marketing at Kount. “It seems everyone knows that mobile is finally poised to make an impact, but the urgency to make sure mobile fraud protection is in place is lacking.”
Among the survey findings:
- 39.7% of organizations can detect if a customer is transacting from a mobile device, and only 17% can determine the type of mobile device. Mass merchants are most likely to identify mobile devices by type (45.5%), whereas 0% of insurance companies surveyed could determine if transactions are coming from a mobile device at all. Gaming/social sites are the only merchant category able to identify all transactions that come from mobile devices, but only one-quarter (25%) can determine the device type.
- The share of merchants that believe mobile commerce is somewhat or far riskier than traditional ecommerce both declined, by about 6% and 4%, respectively.
- One-quarter (24.2%) of respondents believe mobile requires specialized fraud tools, a decrease from 2013 (32.2%).
- Nearly one-third (28.4%) of merchants plan to add no additional tools or services to combat mobile channel fraud.
- At the same time, more than 37% plan to add mobile point-of-sale (POS) systems; 27% plan to add mobile apps for online shopping; and 18% plan to create dedicated mobile sites.
- The number of merchants that consider managing the complexity of new payment types the biggest obstacle to mobile adoption more than doubled to 20% in 2014 from 8% in 2013, and has tripled since 2012 (6.5%).
- Consumers are using various payment methods for mobile transactions: credit cards are the preferred method (62.6%), but PayPal (13.5%) is almost as popular as paying with a debit card (14.5%).
- Consumers payment methods vary by merchant category: alcohol/tobacco customers are most apt to use debit cards (42.9%); direct-response customers are most apt to use PayPal (66.7%); financial services customers are highest users of prepaid/gift cards (12.5%); and dating/social site users are most apt to use Bill2Phone offerings (16.7%).
- Less than one quarter (23.7%) of merchants accept mobile wallets, which is the lowest amongst all respondent groups. PayPal is the most accepted form of mobile payment, more than credit cards and debit cards, accepted by 54% of merchants.
- While Apple Pay launched less than six months ago, it already has equal levels of merchant acceptance as Google Wallet; both are accepted by 32% of merchants that accept mobile wallets; however, support for Apple Pay (42%) by service providers and non-merchant organizations already exceeds that for Google Wallet (39%).
- Merchants are employing more tools and services to combat mobile fraud, as 79% overall say they are using one or two tools, while 40% of merchants listed just one service.
- Across all organizations, the top three tools for preventing fraud in the mobile channel are reported to be ID authentication (49%), device ID (48%) and secure mobile payment methods (44%). While it is still the most commonly used tool fraud prevention tool by all merchants in 16 different industries, identity authentication use declined in 2014 (38.2%) from 2013 (41.7%).
Click here to download the complete report.
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