If the late 90s witnessed how e-commerce revolutionized the way consumers shop, then 2011 will be the year in which mobile commerce (m-commerce) revolutionizes online businesses. For online merchants, chances are that an increasing percentage of your future online sales will come via smartphones. The statistics speak for themselves – mobile commerce is here to stay. M-commerce sales worldwide are predicted to reach USD119 billion by 2015 while the average increase in the number of consumers to carry out mobile payments is expected to reach 40% globally. With the expected boom, mobile payment security will definitely be a key issue-fraudsters will start to target the mobile channel. It is thus no surprise that the rise of m-commerce will lead to a rise in mobile fraud as well.
Rise of m-commerce; rise of mobile fraud
Understanding why m-commerce has taken the world by storm is key to better assessing the risks of mobile-related fraud. The immediacy, or the real-time availability of services, and the instant connectivity anytime and anywhere, has given users greater convenience more than ever. When consumers can shop independent of location and get an instant fulfillment, they tend to indulge in more impulse purchases. Furthermore, merchants can provide them with more targeted services based on their location, time of the day and interests.
Ironically, what makes m-commerce so appealing to both consumers and merchants is also the biggest challenge in managing mobile fraud. M-commerce is, well, mobile and immediate. To take full advantage of m-commerce without suffering from the consequences of fraud, merchants need to revise their anti-fraud tools.
Managing mobile fraud: key considerations
To successfully manage m-fraud and optimize their mobile sales, merchants should take these aspects into consideration:
- Their online shops and especially their checkout sites (if redirected to a different one) should be suitable for the mobile channel, as not all smartphones’ operating systems can support web shops correctly. Consumers are unable to complete their payment when there is an issue with the checkout system.
- Anti-fraud tools relying mainly on geolocation verification should be more flexible. The nature of m-commerce implies more changes in the physical location as compared to online shopping from a PC.
- Similarly, IP addresses change more often in m-commerce, which means that verification tests should be less dependent on this feature.
E-merchants are equally advised to consider fraud management as a whole, using a trusted system to monitor all fraudulent orders placed, regardless of the channel used. This will better assess the long-term implications of the fraud management and its alignment with the company’s objectives.