In Depth

Merchants: “Mobile Commerce is Riskier Than eCommerce”

There’s no question that mobile has given merchants a whole new way to reach customers. But, it’s also given merchants a whole new set of things to worry about. Kount’s latest survey of 2000 merchants reveals that there’s been a marked increase in the number of merchants that believe that mobile commerce is riskier than traditional eCommerce and that existing fraud tools won’t cut it. More interesting, is that few merchants, including fewer than 20 percent of the largest merchants surveyed, aren’t even pursuing complete fraud solutions. So, what are merchants doing to protect themselves from mobile commerce fraud?

We’re in the midst of a mobile revolution. Consumers and businesses alike are increasingly relying on using their mobile devices to make payments, check bank accounts, transfer funds, and more. However, alongside the excitement about mobile payments and what they can bring to the lives of shoppers and merchants, there is some merchant anxiety.

Kount, a provider of security solutions for card not present transacting, took  a closer look at the mobile payments ecosystem, the security concerns that surround it and how merchants are responding. Nearly 2,000 payments and/or fraud professionals including merchants, service providers, acquirers, card associations and issuers were surveyed. What resulted was the second edition of The Mobile Payments & Fraud Survey: 2014, which we have highlighted below.


This year’s data collected indisputably demonstrates that the mobile channel is growing, changing and attracting more interest from both consumers and merchants. While a key priority for merchants is sales conversion, the opportunity to reach new customers is the main reason why they want to deploy mobile solutions, with nearly 50 percent of merchants seeing that opportunity the most important value-add.
Mobile Value Add

According to Kount’s survey, almost two-thirds of respondents noted that they already actively support a mobile payments channel, while an additional 23 percent plan to support it by the end of this year. And, about 21 percent of merchants polled indicated that they do more than 20 percent of their business via mobile, more than doubling 2010’s 10 percent figure. And how do people pay them when mobile is the channel they use to reach them?  Most, about 60 percent, said that their preferred payment type was credit, with PayPal at 15 percent, mostly, at least for now, supporting the purchase of books, movies, music, and making P2P payments.

Payment Forms

While this is undoubtedly good news for the mobile commerce ecosystem, Kount’s report reveals that merchants are still skeptical when it comes to the risks associated with the channel.


Merchants are worried about how to protect the mobile channel from fraud. Respondents were more likely to believe that not only is the mobile channel riskier than the eCommerce channel, they believe that they need different tools above and beyond those used currently to manage standard risks associated with e-commerce.

Nearly one third of survey respondents reported that using mobile was “somewhat riskier” than standard web commerce – up from just under 25 percent a year ago.

Mobile Fraud Risk


And, although in 2013, nearly 40 percent of respondents believed their internal e-commerce fraud processes were enough for managing fraud risk in the mobile channel, in this year’s survey, that declined to about one quarter.


Despite being increasingly aware of these obstacles, many respondents (nearly double the amount of those polled in 2013) believe that implementing specialized tools could help mitigate the risks and ease the process.

As for what’s being done now, the report showed that the mobile fraud tools being used the most among merchants are ID authentication and secure mobile payment methods, with the largest merchants most likely to use fraud scoring, geolocation, modeling, and velocity checks. Mobile geolocation and NFC were the least used mobile fraud solutions among merchants polled.

Mobile Fraud SolutionsAlongside their different tactics in the works, there is an increased dedication to (and faith in) fighting fraud in the mobile space. A significantly higher proportion of merchants now believe it is “very important” to be able to detect when transactions are coming from a mobile device, while the selection of merchants that were undecided or “neutral” fell sharply from 14 percent last year to two percent this year.

We’ve just scratched the surface. Kount’s Mobile Payments Fraud Survey: 2014 is (75) pages long with numerous charts and graphs. To download the full report and read more of Kount’s insights into merchant, mobile and security, click the button below. 






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