The annual Cyber Monday shopping holiday is a boon to mobile payments, but remains a significant challenge for e-commerce security.
The Monday after Thanksgiving is a day when U.S. retailers offer steep discounts online to generate more spending from shoppers who are back at their desks following the Thanksgiving holiday. And as technology advances, more consumers are browsing deals on the go as well.
"Things are different this year for Cyber Monday, especially around the amount of mobile commerce occurring," said Aaron Kline, director of e-commerce for ID Analytics.
As a percentage of overall transactions, mobile has already increased to 10% this year from about 5% in 2013, Kline said, citing industry reports. "I am sure that will go even higher during this holiday season," he added.
Online payment giant PayPal Inc. expects total payment volume on Cyber Monday to increase in a manner it has the past two years. Compared to 2012, global mobile total payment volume rose 115.6% in 2013, while the number of global mobile shoppers rose 93.6%, PayPal data shows.
However, any digital checkout process runs the risk of enabling fraudsters, Kline added.
"Fraudsters keep coming, and they are relentless," Kline said. "The amount of mobile malware is increasing and it compromises both consumers and merchants."
Earlier this year, ID Analytics upgraded its anti-fraud software in anticipation of fraudsters moving to e-commerce because of EMV upgrades tightening security at the point of sale.
The company's software historically looked at the identity of the individual user trying to make a purchase, Kline said. Now, ID Analytics also uses fingerprint biometrics and device reputation analysis to help assess transaction risk, Kline added.
The FIDO Alliance has been pushing hard to replace passwords in e-commerce, and
MasterCard and Visa recently announced their own initiatives to eliminate passwords in to improve online security.
But fraud trends change as e-commerce volume increases, said Erika Gallo, director of global risk management at Retail Decisions.
If the first half of November, Retail Decisions saw a 30% increase over last year in online transactions and a 25% increase in the value of those transactions in the U.S. Prior to the Black Friday and Cyber Monday shopping events, the average ticket price of fraudulent transactions increased 38%, from $272.71 in 2013, to $366.77 in 2014.
Part of the increase in fraud is related to the popularity of purchasing a product online and picking it up in the store, Gallo said. "It is extremely attractive to fraudsters who can also collect their orders within an hour of purchase, thus significantly improving their chances of evading detection," she added.
Many companies and organizations are working to implement new defenses, but they may not make a significant difference this year, said Julie Conroy, senior analyst and fraud expert with Boston-based Aite Group.
"While these are all very promising initiatives, all of them are in their infancy," Conroy said.