Survey: Retailers falling behind on mobile adoption and fraud protection

Boise, Idaho -- Merchants are not keeping pace with the growth of mobile when it comes to fraud and mobile payment adoption, according to a study by Kount, CardNotPresent.com and The Fraud Practice.



The third annual Mobilr Payments & Fraud Survey revealed that retailer awareness is not keeping pace with mobile fraud growth, and the support for the mobile channel is not meeting predictions and expectations as reported by respondents in previous years’ surveys.



In addition, concerns over the implementation around new payment methods such as Apple Pay have risen. And while new tools are available to merchants to meet increased fraud, there is very little consistency in adoption of these tools across industries.



“The data shows that the industry as a whole is further behind on mobile adoption and fraud protection than they were a year ago, and in fact, some are even pulling back from it,” said Don Bush, VP of marketing at Kount. “It seems everyone knows that mobile is finally poised to make an impact, but the urgency to make sure mobile fraud protection is in place is lacking. To successfully support the growth of mobile, organizations must first ensure IT departments are talking with fraud teams to understand risks and rewards or mobile fraud will grow to a bigger issue in the coming years.”



Exponential growth has led to many organizations’ confusion about best practices in payments and fraud mitigation. This may be one reason there appears to be a slight slow down in adoption and policies surrounding the mobile channel.



Survey findings include:



• Nearly half of organizations surveyed (40.8%) said they are uncertain if fraud increased following a major data breach and over half (60%) of respondents are uncertain if mobile fraud is growing at a faster, slower or equal pace as their overall mobile transaction volume.



• Less than 40% (39.7%) of organizations can detect if a customer is transacting from a mobile device, and only 17% can determine the type of mobile device.



◦ Mass merchants are most likely to identify mobile devices by type (45.5%), whereas zero percent of insurance companies surveyed could determine if transactions are coming from a mobile device at all.



◦ Gaming/social sites are the only merchant category able to identify all transactions that come from mobile devices, but only one-quarter (25%) can determine the device type.



• Less than 40% (39.4 %) of merchants surveyed track fraud by channel and differentiate it from standard ecommerce transactions overall.



• Organizations are split on where the fraud originates, as 32% indicated mobile fraud was coming from domestic transactions, while 31% stated most mobile fraud comes from international sources.



• Nearly one-third (28.4%) of merchants plan to add NO additional tools or services to combat mobile channel fraud. At the same time, more than 37% plan to add mobile POS systems; 27% plan to add mobile apps for online shopping; and 18% plan to create dedicated mobile sites.



• Consumers are using various payment methods for mobile transactions: credit cards are the preferred method (62.6%), but PayPal (13.5%) is almost as popular as paying with a debit card (14.5%).



• Consumers payment methods vary by merchant category: alcohol/tobacco customers are most apt to use debit cards (42.9%); direct response customers are most apt to use PayPal (66.7%); financial services customers are highest users of prepaid/gift cards (12.5%); and dating/social site users are most apt to use Bill2Phone offerings (16.7%).



To download the survey, visit Info.kount.com/mobile-payments-reports-2015.