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:
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.
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:
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.
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:
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.
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.
“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.”
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