More e-commerce and multi-channel merchants are accepting payments from mobile devices, even though they haven't addressed all of the security gaps inherent to the technology.
Merchants somehow have become more complacent about managing risk in the mobile channel, even though it calls for more levels of device and location monitoring, according to new research from e-commerce and mobile fraud prevention provider Kount Inc.
Only 8% of merchants consider the mobile channel to be far riskier than traditional e-commerce, down from 14% last year. Merchants are showing trust in mobile wallets, with 37% predicting that fraud will decrease as consumers more widely adopt mobile, while 29% expect an increase.
Kount surveyed more than 800 merchants in compiling its fifth annual Mobile Payments & Fraud 2017 report. More than half of the merchants were multi-channel, while 46% were strictly e-commerce/mobile merchants. Overall, nearly 80% of the merchants said they support mobile channels.
In illustrating the uncertainty with mobile some merchants still have, 14% of respondents said they were unable to determine if a transaction they accepted came from a mobile device. But that is still big progress compared to five years ago, when more than 55% of merchants said they did not have the ability to differentiate mobile transactions. Today, 28% of merchants say they are still unable to tell whether a mobile transaction originated abroad.
"That is a big point, on having visibility on where a transaction is coming from and what type of device is transacting with the merchant," said Don Bush, vice president of marketing at Kount.
If merchants don't know if someone is shopping from an iPhone or an iPad or something else, they can't take advantage of technology that can tell them whether it is a safe transaction or not, Bush said. "It kind of leaves the merchants flying blind."
Opinions about mobile fraud vary. Sixty percent of merchants say "browser-based" mobile payments pose the greatest fraud risk, while only 25% feel the mobile channel is higher risk than "web e-commerce," or transactions taken from desktop of laptop computers.
Overall, 40% say they have seen an increase in mobile channel fraud. At the same time, 25% feel mobile app-based payments pose the greatest fraud risk, and 14% feel that contactless mobile payments are the biggest risk.
Since Kount conducted the first survey on these topics in 2012, merchants have nearly doubled their mobile payments options online and in-store. The percentage of merchants who support a mobile app for online shopping has grown to 44% in 2017, from 21% in 2013, and the acceptance of mobile payments at the physical point of sale nearly doubled to 29%, from 15%.
"Merchants are starting to understand that there is more to the mobile channel than just saying we are now selling products on mobile and our current fraud system will be fine," Bush said. "There are specialized tools, features and technology to use to protect their mobile mobile channel in the same way they can protect their legacy systems."
Merchants that accept in-store mobile wallets prefer PayPal and Apple Pay, both at 48%, and Android Pay at 38%. The survey also revealed that merchants accept 3.4 different mobile payment methods on average, with nearly 70% supporting three or more.
Merchants said they associate "safety" with Apple Pay, at 61%, far more than other brands, with Android and Blackberry each coming in at 3.7%.
"It's the Apple brand that stands out in merchants' minds for security," Bush said. "They don't really know the difference, technologically speaking, between Apple Pay and Samsung Pay or others."