Retailers struggle to balance the risks and benefits of mobile commerce

More and more retailers across the globe are tapping into the opportunities of mobile commerce - but the majority of them have yet to fully understand and counteract the fraud risks than come with m-commerce, according to a new study, 'Mobile Payments and Fraud: 2015 Report.'

Commissioned by Kount, The Fraud Practice and CardnotPresent.com, businesses which offer solutions for fraud and risk management, the report found that the number of retailers using mobile commerce has increased this year, with 68.7 percent of all international retailers supporting m-commerce and an additional 20.5 percent aiming to offer it from this year onwards.

The study found that m-commerce is crucial for larger retailers, with 57 percent of merchants with annual revenues of 32.4 million pounds of more citing their mobile sales strategies as "very important" compared to 31 percent of those with revenues less than 3.4 million pounds. 89.1 percent of the respondents agreed m-commerce is very or somewhat important for their company growth plans, up from 83.5 percent last year.

Study warns retailers to remain aware the risks of mobile commerce - which includes fraud

From the 1,500 questioned for the study, which included fraud and payment experts representing retailers, service providers and card issuers, 62.6 percent said their customers prefer to pay via credit card through their mobile device, followed by 14.5 percent paying with debit card and 13.5 percent through PayPal.

The largest obstacle to mobile adoption, according to 27.8 percent of the respondents, was making it easier for consumers to carry out a transaction via m-commerce. Other issues faced include the complexity of new payment types and addressing new fraud risks, a concerned felt by 11.3 percent of respondents, down from 20.1 percent last year.

However, the study also found that despite the continued growth in mobile fraud, retailers awareness is in fact falling behind. The majority of the respondents believe that addressing fraud risks has become less of a priority, with less than 40 percent of merchants claiming to be tracking fraud by channel, while 34.2 percent were unsure whether they actually were, which means that half of retailers do not know where their fraud originates.

"Different channels have different challenges. Merchants need to be aware that fighting mobile fraud requires specialized tools," commented Don Bush, Vice President for Marketing at Kount. "Not securing a mobile channel with specific tools will leave a merchant vulnerable." The study note that retailers are falling behind as m-commerce rapidly develops into the channel of choice for consumers, with over one-third of transactions being carried out through mobile.

Retailers with annual revenues of 32.4 million pounds were found to be more likely to track fraud attempts and losses by channel than those with lower revenue. 61 percent of respondents were uncertain if fraud was increasing or not in their mobile channel, with 13.2 percent claiming it was increasing and 4.8 percent stating it was decreasing.

48.4 percent of respondents believe that m-commerce is just as risky when it comes to fraud as e-commerce, however when questioned if the mobile channel needed extra tools to manage and assess fraud risk, 28.4 percent of respondents said standard e-commerce fraud processes and services were sufficient. 47.4 percent of the respondents did acknowledged that m-commerce did require additional tools, as standard e-commerce fraud processes were unable to support the channel fully and 24.2 percent believed m-commerce requires very specialized fraud tools.

"There are some good signs in the industry – organizations across the board are employing more tools and services to combat fraud, including those that are through mobile. However, complacency is no longer an option because the mobile channel is here to stay."