from the blog www.stuckincustoms.com

Study: Mobile Commerce Fraud Cost up 18 Percent

January 29, 2024         By: Melanie Macinas

The cost of fraud in the mobile commerce space has soared 18 percent in 2014 over the past year, says a new study released by LexisNexis.

The 2014 LexisNexis True Cost of Fraud mCommerce Study determined fraud cost for merchants and analyzed merchants’ perceptions of the benefits and risks associated with mobile transactions.

The study also informed merchants on how to mitigate fraud and its costs by employing essential fraud technology solutions.

According to Aaron Press, LexisNexis Risk Solutions’ retail industry fraud expert, “The key is for everyone, particularly merchants, to understand that mobile commerce fraud is qualitatively different than fraud in other channels. By recognizing a mobile customer and treating the mobile transaction differently, we should be able to bring mobile fraud rates down to level as low or lower than other channels.”

For 15 percent of merchants who accepted mobile payments last year, mobile transactions accounted for just 14 percent of the total volume of transaction, but made up 21 percent of the volume of fraudulent transactions—an indication of the inherent risk associated with these types of transactions.

In spite of high mobile fraud costs, the study stressed that merchants still managed to keep overall fraud costs down, owing to the low percentage of total volume attributed to mobile payments.

The increasing instances of fraud comes along with the growing adoption of mobile commerce channels as merchants seek to capitalize on the high prevalence of mobile devices.

According to the study, mCommerce adoption soared to 15 percent, with customer convenience being the top reason for adoption.

When asked about the effect of mobile payments evolution on their overall business strategy, 23 percent of study participants believed they will have a moderate to significant impact on their business policies.

Those who believed mobile payment technology will affect their overall business strategy cited several steps to take full advantage of these technologies. These included investing and increasing their visibility of mobile payment systems.

How can merchants mitigate this fraud risk in mobile channels?

Press adds, “Each part of the payments value chain is working to protect the system as a whole, but they each have limits to what they can do. For merchants, fraud mitigation solutions come from multiple sources, including payment processors, but the market has evolved to a point where specialized providers of fraud tools have developed the most popular and effective solutions. That means it is primarily up to the merchants to seek out the solutions that best fit their needs.”