Money & The Economy

Paypal biggest winner, Apple Pay biggest loser as e-payment options

Paypal gained the most ground as Apple Pay lost the most market share among e-payment solutions, according to findings from the sixth annual 2018 Mobile Payments & Fraud Survey (MPFS), which measures the state of mobile payments and mobile channel fraud from each prior survey year. In surveying nearly 600 merchants, the report found that several major mobile wallets have lost traction, with the percentage of respondents accepting Apple Pay in 2018 down from 48 to 35 percent, the most drastic decline of all mobile wallets, and Google Pay down from 38 to 25 percent.

Since the inaugural MPFS was conducted in 2013, merchants have steadily reported an increased awareness of mobile fraud risks, however, about 35 percent of merchants still do not track mobile fraud or do not know whether mobile fraud attempts increased or decreased from last year. The share of merchants who say that the mobile channel requires specialized tools for risk management is at the lowest recorded level in all six years of this study. Only half of surveyed merchants believe the mobile channel requires additional or specialized tools, compared to between two-thirds and three-quarters of merchants in each of the past studies.

“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. “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.”

Additional survey findings include:

More Money, More…Payment Options
Support is up across the board for Near-Field Communication (up from 29% to 37%) and other mobile payments at the physical point-of-sale, while 26 percent of merchants plan to increase or add support for social commerce (purchases made directly through social media channels such as Instagram, Twitter etc.) this year, and merchants’ support for mobile wallets climbed from 22 to 29 percent. However, this increase in choice and support comes at the detriment to specific mobile wallets:

  • Most notably, online merchant support for Apple Pay has gone down from 48% to 35%
  • Google Pay (previously Android Pay), is down from 38% to 25%
  • Support for PayPal increased (from 48% to 64%) while 10% accept AliPay and 10% accept other e-wallets
  • The share of merchants who accept Samsung Pay, Visa Checkout, MasterPass, and Chase Pay all stayed constant from last year, while AMEX Express Checkout enjoyed the biggest gain in support, growing acceptance from 9% to 16% of merchants

Mobile Pains and Gains
As is typical for any emerging technology, commerce in the mobile channel has faced its fair share of growing pains, from issues with ease of use to payment processor compatibility in mobile apps.

  • The most commonly cited challenges by mobile channel merchants today include:
    • Maintaining ease of use for the consumer (60%)
    • The ability to detect fraudulent order attempts (52%)
  • Nearly one-third of merchants surveyed believe the mobile channel will represent at least half of their total revenue by 2020
  • Of the merchants who track abandonment rates:
    • About 42% of merchants report a mobile checkout abandonment rate of less than 20%
    • 25% say their abandonment rate is more than 40%
    • 11% say their abandonment rate is at least 60%

Channel Risk: Varies by Vertical
About half of merchants (49%) stated that traditional eCommerce, consumers shopping from desktop browsers, is still their highest risk channel. Mobile web browser transactions are the next most likely to be considered the highest fraud risk, as indicated by about 21 percent of merchants, followed by 18 percent of merchants who say mobile app payments are the highest risk. However, this varies by vertical:

  • More than 75% of financial institutions and lenders, as well as food and beverage merchants, say that mobile fraud attempts increased last year
    • More than two-thirds of digital streaming/download, health/beauty merchants, and dating social sites say the same
  • More than 38% of merchants overall consider the mobile channel higher risk than desktop eCommerce, or 43% of merchants when excluding those who don’t support the mobile channel today. This is up from just over 25% of merchants last year, and back in-line with what merchants reported in 2015 and 2016
    • Money movement or remittance organizations are the most likely to report the mobile channel as being highest risk, as half of these merchants list either mobile app or mobile web browser transactions as the highest fraud risk
    • Dating and social sites (80%) and health/beauty merchants (73%) are the most likely to say desktop web browser transactions are the highest fraud risk
    • Just 17% of merchants definitively state they have separate risk management strategies for mobile versus desktop eCommerce channels
    • More than 35% of each digital download or streaming, hardware/home improvement, and jewelry merchants indicated that mobile app or mobile web browser transactions are their highest risk channels

Mobile App-titude
Among the industries that prioritize mobile, merchants selling jewelry (71%), electronics and computers (63%), health/beauty products (63%), and apparel or accessories (56%) are the most likely to consider the mobile channel very important to their overall strategy. The mobile sales channel increased as a source of total revenue once again after remaining stagnant last year, while mobile sales as a portion of total revenue have grown significantly since 2013.

  • The percentage of merchants who earn the majority of their revenue via mobile channels grew five-fold between 2015 and 2018:
    • Just 2-3% of merchants earned more than half of their total revenue in the mobile channel between 2013 and 2015, compared to 17% of merchants earning that much of their revenue in the mobile channel today
  • Nearly one-third of merchants surveyed believe the mobile channel will represent at least half of their total revenue by 2020, while 60% of merchants say the mobile channel will represent at least 30% of their total revenue by then

Few Merchants in Fraud-Fighting Shape
The majority of merchants surveyed (52%) indicated using third party tools or service providers to manage risk and detect fraud in the mobile channel, while one-third do not use third party services, either managing mobile channel fraud entirely in-house or not managing it at all. And 15 percent of respondents were uncertain, suggesting little or no fraud prevention strategy. The most-utilized risk management tools for detecting fraud in the mobile channel include:

  • CVV or card verification value check (62%)
  • Fraud scoring (43%)
  • Address Verification Services (AVS) (39%)

Although steadily increasing over the years, less than 20 percent of merchants are making strides by adopting one of the most effective fraud fighting tools available to merchants. AI/machine learning was utilized by just five percent of merchants for mobile channel transactions in 2015, compared to over 18 percent of merchants today.

True Detectives
The ability to detect transactions coming from mobile devices has grown considerably since the inaugural Mobile Payments and Fraud Survey, from just 16 percent of merchants who could detect and differentiate between types of mobile device in 2013 to 46 percent of merchants with this capability today.

  • While the share of merchants unable to detect when a transaction is coming from a mobile device increased to 27% from 14% last year, this is still significantly lower than the 55% of merchants overall who were unable to differentiate desktop eCommerce from mobile eCommerce in 2013
  • Just over half of merchants (52%) can tell which mobile operating system is in use (iOS, Android, Windows, etc.), while 46% can differentiate the specific type of mobile device, for example whether the consumer is using a smartphone or tablet

Tech, Tools, and Techniques
More than 83 percent of merchants are using two or more fraud prevention tools or techniques in the mobile channel, while two-thirds are employing three or more, and 25 percent are utilizing seven or more tools or services.

  • One-in-three merchants use identity authentication in the mobile channel, while about one-in-four are currently using velocity checks, device identification, and a rules engine
  • Mobile geolocation and 3D secure consumer authentication programs like Verified by Visa and MasterCard SecureCode are each used in the mobile channel by about one-in-five merchants

“It’s been remarkably insightful to compare data across the six years of this study, enabling us to monitor trends around support for mobile commerce and risk management, as well as areas of weakness and concern expressed by merchants over this time,” said Justin McDonald, Senior Risk Management Consultant at The Fraud Practice. “While merchants are more likely to distinguish between a mobile and desktop transaction today than they were two years ago, fewer are taking the next step to secure the mobile channel with a dedicated fraud strategy. 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.”

Support Conservative Daily News with a small donation via Paypal or credit card that will go towards supporting the news and commentary you've come to appreciate.

Carl Fox

Carl Fox is the senior money and finance writer for Conservative Daily News. Follow him in the "Money & The Economy" section at CDN and see his posts on the "Junior Economists" Facebook page.

Related Articles

Back to top button