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May 19, 2015

Merchants must rethink fraud for the mobile era

Kount survey shows that mobile commerce is increasing, but retailers are not always aware of the risks.

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Digital download websites are ahead of the average online merchant at balancing risks and gains from mobile commerce, according to research.

The findings from Kount showed that 68.7 percent of merchant respondents now support mobile commerce, with 20.5 percent planning to support it from this year. This compares to 63.6 percent who supported it last year. 89.1 percent claimed that the channel is very or somewhat important for their growth plans.

However, among websites selling digital goods, 77.8 percent of websites claimed that they actively supported mobile already, while 14.8 percent plan to do so in 2015. 50 percent claimed that between five and 20 percent of sales came from mobile.

In addition, 57.4 percent felt that having a mobile strategy was very important to their growth and 33.3 percent said it was somewhat important. 84.6 percent of these respondents felt it was important to detect whether visitors were using mobile to transact.

These websites had several methods to prevent mobile-specific fraud: device ID recognition, mobile geolocation and secure mobile encryption were used by 36 percent, 28 percent and 36 percent respectively.

The biggest obstacle to mobile adoption was the need to make it easier to transact, according to 27.8 percent of respondents. Among digital goods websites this figure rose to 30.4 percent, while 13 percent of these named complexity of new payment types.

The fraud risk was a challenge for 11.3 percent of businesses, a fall from 20.1 percent the previous year. 17.4 percent of digital goods websites cited working out how to manage fraud risk.

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In addition, 39.4 percent of merchants said they tracked fraud by channel but 34.2 percent were uncertain as to whether they were. 61 percent, meanwhile, were uncertain whether fraud was increasing in mobile.

34.8 percent of those working in digital goods said mobile was somewhat riskier as a channel and 6.5 percent said it was far riskier, while 56.5 percent said it was just as risky.

Don Bush, VP Marketing at Kount commented that "The mobile channel provides tremendous opportunities but also great risks. Merchants need to remember that in order to benefit from mobile commerce they must adopt mobile specific anti-fraud tools."

Don Bush, vice president of marketing at Kount, argued there was still work to be done: "To successfully support the growth of mobile, organisations must first ensure IT departments are talking with fraud teams to understand the risks and rewards, or mobile fraud will grow to a bigger issue in the coming years."

The survey polled nearly 1500 fraud and payment professionals representing merchants, fraud and e-commerce service providers, card issuers and card associations. It took place between November 2014 and January 2015.

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