Thursday, June 14, 2018
According to an annual survey of merchants, two major mobile wallet providers lost traction over the past year. Merchants accepting Apple Pay slipped from 48 percent to 35 percent in 2018, while Google Pay dropped from 38 percent 25 percent year-over-year. Support for PayPal, however, surged from 48 percent to 64 percent. Looking at the overall picture, mobile wallet support grew from 22 percent to 29 percent.
Pain points cited by merchants in the 2018 Mobile Payments & Fraud Survey, conducted by Kount Inc. and The Fraud Practice, included maintaining ease of use for consumers for 60 percent of those surveyed. The ability to detect fraudulent order attempts was a challenge for 52 percent. Even with these challenges, nearly one-third of merchants were optimistic that the mobile channel will represent at least half their total revenue by 2020.
Support across the board was up for near field communication at the POS, which grew from 29 percent to 37 percent year-over-year. Twenty-six percent of merchants surveyed indicated they plan to increase or add support for social commerce through social media channels.
The survey also found that while merchant awareness of mobile fraud risks continues to improve, the percentage of merchants that track mobile fraud to understand fraud attempt patterns remains relatively low, representing 35 percent of merchants surveyed.
"For the third consecutive year, merchants are showing signs of complacency and even regression in terms of managing mobile fraud risk," said Don Bush, Vice President of Marketing at Kount.
Merchant perceptions may be driving mobile risk tolerance to some degree. About half of those surveyed viewed traditional ecommerce via desktop browsers as their highest risk channel, compared with mobile web browser transactions (21 percent) and mobile app payments (18 percent). Overall, 38 percent viewed the mobile channel as high risk.
Merchant pullback in mobile fraud monitoring comes at an inauspicious time, since more than 75 percent of financial institution, lender, and food and beverage businesses surveyed have noted increases in mobile channel fraud attempts over the last year.
"Despite the increase in mobile fraud and the evolution of tactics carried out by criminals to commit fraud in this channel, the number of merchants implementing specialized tools has decreased, demonstrating that merchants struggle to properly address fraud in the mobile channel including both apps and mobile browsers," Bush said.
Less than 20 percent of those surveyed have adopted artificial intelligence/machine learning, considered one of the most effective fraud detection tools available. The risk management tools most often used for detecting mobile channel fraud were card verification value check (62 percent), fraud scoring (43 percent), and address verification services (39 percent). Over 83 percent use two or more fraud prevention tools or techniques.
Both companies involved in the survey recommend a dedicated fraud strategy for the mobile channel to coincide with other channels. "Although mobile fraud attempts increased for 60 percent of merchants last year, just 17 percent employ a separate risk management strategy for the mobile channel," said Justin McDonald, Senior Risk Management Consultant at The Fraud Practice.
An area where progress is being made is the ability to detect transactions from mobile devices separately from other channels, which over the past five years, has grown from 16 percent to 46 percent among the merchants surveyed. The survey also found that 52 percent of merchants can tell which mobile operating system is in use.
As to which merchant categories are expected to lead in mobile payment acceptance, merchants selling jewelry (71 percent), electronics and computers (63 percent), health/beauty products (63 percent), and apparel or accessories (56 percent) were the categories most likely to consider the mobile channel very important to their overall strategies in the coming years.
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