Mobile Payments Account for 21% of Fraudulent Transactions
Mobile payments make up 21% of fraudulent transactions in the United States, even though they only represent 14% of the market. According to the 2014 LexisNexis True Cost of Fraud Study, the report shows mobile payments are putting mCommerce merchants at risk and costing them a significant amount of money.
Merchants currently pay $334 for every $100 of fraud committed through mobile channels, up from $283 in 2013. The loss of revenue mobile merchants experience from fraud increased 70% last year, from 0.80% in 2013 to 1.36% in 2014.
This increased risk is partially due to the number of payment channels now available in mobile platforms. Digital wallets, mobile websites and payment applications all put mCommerce merchants at risk of fraud. The study showed the average mobile merchant operates through 4.5 payment channels, compared to 2.6 payment channels used by all merchants.
“To reduce customer friction and sell more through the mobile channel, now is the time for mCommerce retailers to put in place fraud prevention tools to counter the disproportionate amount of fraud that is currently occurring,” Dennis Becker, Vice President of Corporate Markets for LexisNexis Risk Solutions, said in a statement.
The study indicates identity verification is the top fraud prevention challenge that mobile merchants currently face. 24% of fraudulent transactions are the result of “friendly fraud,” which occurs when a friend or family member uses a person’s credit card, debit card or bank account to make an unauthorized purchase.
“The findings of this study suggest that the more mCommerce companies move away from a ‘one-size-fits-all’ fraud strategy the faster they will grow and be more profitable,” said Becker.