As Mobile’s Importance Increases, Ease of Use And Fraud Risk Take on a Higher Profile

By 2020, nearly 33% of merchants say the mobile channel will account for at least half of their total revenue. This, and other mobile-payments insights, come from the Kount Inc. 2018 Mobile Payments & Fraud Survey released Thursday.

Now in its sixth year, the survey of almost 600 merchants found that challenges abound for merchants in the mobile channel. Of the most common challenges, 60% cited maintaining ease of use for customers, followed by the ability to detect fraudulent order attempts, at 52%.

Such concerns play a role in improving the conversion rate for mobile commerce, which is the rate of sales out of total site visits. M-commerce conversion rates typically are not as good as for desktop e-commerce sites. Many consumers find it unwieldy to input their credit or debit card numbers and billing and shipping addresses on smaller touch screens.

While 49% of merchants consider traditional e-commerce coming from desktop browsers as their highest-risk channel, 38% say the mobile-channel risk is higher. In the 2017 report, that figure was 25%.

By select verticals, half of the remittance companies in the survey said either mobile app or mobile Web browser transactions had the highest risk. That is followed by digital-download or streaming merchants, hardware/home improvement retailers, and jewelry merchants, each at 35%.

More than half—52%—of merchants use third-party tools or service providers to help manage mobile fraud, with 33% either managing it in-house or not managing it at all.

The most common fraud-mitigation tools were card verification value check, 62%, fraud scoring 43%, and using an address-verification service, 39%.

In related results, the survey, conducted by Fraud Practice LLC and also sponsored by PayPal Holdings Inc.’s Braintree unit, found that 35% of merchants accept Apple Pay, down from 48% in 2017. Google Pay acceptance fell from 38% to 25%. Samsung Pay acceptance was 14%, down from 15%. The survey provided no insight that accounts for these decreases.

Though acceptance for these mobile-payments services, sometimes known as the “Pays,” is down, merchant support for near-field communication technology, which these services rely on to connect with point-of-sale terminals, is expected to increase. Currently 37% support NFC, up from 29% in 2017. Another 31.4% plan support for the wireless technology. Most POS terminals in the last several years shipped with NFC capability as part of the EMV rollout.

The survey also asked about the mobile-payments methods accepted by merchants. Ninety-two percent said they accept credit cards, followed by debit cards, 75%. PayPal came in at 61%; prepaid cards, 36%; automated clearing house payments, 33%; one of the Pays, 29%; cryptocurrency, 3%; carrier billing, 1%, and other 4%.