Mobile sales and with it, mobile fraud are on the rise, according to a recently released report that surveyed 600 merchants.
The 6th Annual Mobile Payments and Fraud report, finds that 17% of merchants said more than half of their revenue comes from mobile, up from 10% in the 2017 survey and a paltry 3% in the 2015 survey.
And mobile fraud is keeping pace with overall mobile channel growth, according to the report. Many merchants said fraud attempts coming from mobile devices increased over the last year:
- 37.7% said it increased over last year
- 34.8% said they don’t know
- 22.2% said it remained the same
- 5.3% said it decreased
Part of the increase in fraud comes from merchants that failed to update their fraud prevention capabilities as they added new capabilities to their site, says Don Bush, vice president of marketing at fraud prevention services provider Kount, which sponsored the study.
“Any change in their strategies—such as adding international geographies to their sales plan, adding new products or new sales channels like affiliate channels, making their site more mobile-friendly, or creating a mobile app—introduce new opportunities for fraudsters to exploit,” Bush says. “Any time they make a change to their site or app strategy, they should review and update their fraud mitigation strategy as well.”
The majority of merchants, nearly 60%, don’t have a mobile fraud strategy that’s distinct from their regular e-commerce web strategy. But 33% of retailers with annual sales of more than $250 million have separate mobile and desktop fraud strategies, the highest of any merchant group, the report says.
It’s important for retailers to have separate strategies for mobile and desktop fraud prevention because a method that is reliable for detecting desktop fraud can be weak for mobile, Bush says. For example, a desktop’s geographic location doesn’t often change and if it suddenly does, that’s an indicator the transaction is fraudulent. On mobile, however, retailers should expect the device’s location to change, which means device location is not a strong indicator of a fraudulent transaction, Bush says.
Overall, 83% of merchants use two or more tools to prevent mobile fraud, according to the study. Higher-revenue merchants also use more fraud detection tools, about five different tools on average to manage mobile fraud, compared with 2.85 tools on average used by lower-revenue merchants.
However, two of the three most commonly used mobile fraud detection tools, address verification services and CVV (card verification value) check, are not strong at preventing fraud, as these two factors are easily obtained by criminals, according to the report.
Here are some tools merchants say they use to detect if a transaction is fraudulent. Retailers could pick more than one.
The report also surveyed the various mobile design and mobile payment options retailers offer. More retailers this year provide a mobile shopping app, at 60%, compared with last year, when 44% of merchants did.
More retailers accept alternative forms of payment, such as Apple Pay. 29% of retailers accept mobile wallet payments this year, compared with 22% last year, and 33% of merchants accept ACH/Bank Transfer Payment, such as Venmo, up from 8% last year.
Merchants that have higher annual revenue are more likely to accept mobile wallet payments, according to the survey. Nearly 40% of retailers with revenue greater than $100 accept mobile payments, compared with 23% of merchants with revenue less than $100 million.
Here’s a look at the mobile wallets retailers accept:
The survey also found that the two of the biggest challenges retailers have with mobile commerce is ease of use for the consumer, noted by 60% of merchants, and detecting fraudulent orders, cited by 52%. Retailers could pick more than one answer.