Kount’s Mobile Fraud Survey Finds PayPal and Apple Among Top Mobile Wallets Adopted by Merchants
Boise, Idaho – June 29, 2017 – Kount Inc. today announced findings from the fifth annual 2017 Mobile Payments & Fraud Survey to understand and measure the state of mobile payments and mobile channel fraud. The report found that while merchants have made a lot of progress when it comes to mobile security, they have a long way to go in order to minimize fraud risk, with 28 percent of merchants still not able to identify whether a mobile transaction came from abroad.
Risky Business
Despite consistent gains in mobile adoption, merchants are showing that they are becoming more complacent about managing risk in the mobile channel. Only a small fraction of merchants (8%) today believe that the mobile channel is far riskier than traditional ecommerce, surprisingly down from 14 percent last year. Merchants also remain fairly trusting of mobile wallets, with more merchants believing that fraud will decrease rather than increase as consumers more widely adopt mobile wallets (37% vs. 29%, respectively).
While strides have been made in identifying the device origin of a mobile transaction – five years ago, more than 55 percent of merchants were not able to detect whether a transaction came from a mobile device but only 14 percent of merchants report this inability today – nearly one-third (28%) of merchants are still unable to tell whether a mobile transaction originated abroad.
“This survey has shown that merchants have made a lot of progress over the years when it comes to their commitment to mobile payments and fraud detection technologies,” said Don Bush, VP Marketing, Kount. “However, card-not-present fraud rates will continue to grow alongside rising online and mobile commerce so it’s important that merchants not become complacent in their security efforts, but rather research specific tools, like comprehensive fraud platforms, that can best protect their business without any negative impact to the customer experience.”
For the first time, the survey examined merchant opinions regarding the payment systems and platforms associated with mobile risk, finding that 60 percent believe ‘browser-based’ mobile payments are those at the greatest risk of fraud. Although only 25 percent of merchants today say that the ‘mobile channel’ is higher risk than ‘web e-commerce,’ nearly 40 percent of merchants indicated that they have seen an increase in mobile channel fraud.
About one-in-four (25%) merchants state that mobile app-based payments are at the greatest risk for fraud
14 percent say that mobile contactless payments face the highest risk of fraud
Data Breach Deja Vu
The report also examines where most organizations stand on data breaches and public sentiment, finding that the majority of merchants (68.4%) have not made changes to their fraud prevention following a data breach, even though more respondents said consumer perception was the most damaging aspect of a breach.
According to Bush, “With the majority of merchants reporting no changes to their fraud prevention practices after a breach, they are leaving themselves open for recurring (and many times preventable) fraud attacks.”
Merchants rated the following as the most damaging aspects of a data breach:
Consumers’ perception of weak security (44%)
Loss of personal data (20.4%)
The fact that fraud results from a breach (15.6%)
Loss of financial data (13.2%)
Uncertain (6.8%)
Ch-Ch-Ch-Changes…
Since the inaugural Mobile Payments and Fraud Survey was conducted in 2013, merchants have nearly doubled their mobile payments options online and in-person: the percentage of merchants who support a mobile app for online shopping has more than doubled (from 21% in 2013 to 44% in 2017); the acceptance of mobile payments at the point-of-sale nearly doubled (from 15% to 29%); and mobile apps supporting in-store shopping experiences nearly tripled (from 5% to 13%). Merchants have also improved their device detection abilities: five years ago, more than 55% of merchants were not able to detect whether a transaction came from a mobile device, but now only 14 percent of merchants are unable to determine the device on which a transaction was made.
It’s a Mobile World and We’re (Not) Just Paying in It
Regardless of the influx of new mobile wallet options, merchants have been slow to adopt the payment method (with only 22% of merchants accepting mobile wallets) – perhaps because the majority of merchants (70%) anticipate consumer mass adoption of these mobile wallets is still two to five years away.
Those that do accept in-store mobile wallets prefer PayPal (48%), Apple Pay (48%), and Android Pay (38%), respectively.
Merchants accept 3.4 different mobile payment methods, on average:
Nearly 70% of merchants support three or more mobile payment methods
47% of merchants support four or more mobile payment methods
20% of merchants accept at least five mobile payment methods
Top mobile-only payment methods accepted from mobile devices include:
Credit Card: 97%
Debit Card: 79%
PayPal: 56%
Gift Card: 36%
Prepaid Card: 33%
Mobile Wallet (including Apple Pay): 22%
More merchants identify ‘safety’ with Apple (61%) than other brands:
Android: 3.7%
Blackberry: 3.7%
Windows: 1.4%
No brand: 30.1%
In A Merchant’s Toolbox
The fraud prevention tools, techniques and services the greatest number of merchants are using today to prevent fraud in the mobile channel are:
Card security codes or checking the CVV (58 %)
AVS (46%)
Fraud Scoring (48%)
Device ID (38%)
Velocity Checks (35%)
Complete Fraud Platform (47%)
ID Authentication 15% (a sharp decline from being used by 32% of merchants in 2015)
“Only 30 percent of merchants overall are concerned with finding antifraud solutions that prevent fraud in the mobile channel,” said Steven Casco, CEO of CardNotPresent.com and the CNP Expo. “At the same time, almost half of merchants say that consumers perceiving weak security would be the most damaging aspect of suffering a data breach – if consumers demand complete fraud platforms, merchants may just feel more compelled to deliver it.”
To download a free copy of the 2017 Mobile Payments & Fraud Survey, click here.
About Kount
Kount helps businesses boost sales by reducing fraud. Our all-in-one, SaaS platform simplifies fraud detection and helps online businesses accept more orders. Kount’s turnkey fraud platform is easy-to-implement and easy-to-use. Kount’s proprietary technology reviews billions of data points and provides maximum protection for some of the world’s best-known brands. Merchants using Kount can accept more orders from more people in more places than ever before. For more information about Kount, please visit www.kount.com.
About the Survey
Kount’s Mobile Payments and Fraud Survey: 2017 Report is the fifth edition of this annual study, in association with CardNotPresent.com, Braintree, a PayPal company, and The Fraud Practice. The report seeks to understand and measure the state of mobile payments and mobile channel fraud. Now with five years of data, this study is able to identify persistent findings and changing trends around many aspects of mobile channel payments and risk. The survey was conducted online from April 2017 to June 2017 with more than 800 merchants from 29 vertical industries and ranging from under $5 million to more than $500 million in revenue.
