By establishing its e-commerce fraud prevention system as a "mobile first" platform, Forter worked to get a step ahead of a growing trend — that many new retailers accept only mobile payments through their apps.
"We launched a new solution for mobile during the past year and we have several customers who are mobile only," said Forter CEO Michael Reitblat. "Many of these newer retailers are just building a business for mobile, selling a specific product or two."
This new generation of retailers and startups seek customers who download an app, order the product and pay for it through the app, Reitblat said. "It is becoming a new area of commerce, but even for those who are not mobile only, we are seeing an increase in transactions coming through their mobile channels."
Forter, based in Tel Aviv but with offices in New York and San Francisco, has been monitoring e-commerce fraud closely since the U.S. migration to EMV chip cards began, shifting fraud away from the physical point of sale. As fraudsters adapted to that change, retailers began placing more emphasis on mobile and omnichannel security.
Because retailers are targeting a mobile-only customer, the focus has been on making a simpler and faster sales process. Consumers generally balk at making an online purchase off a mobile device when the process calls for a lot of typing of personal information or payment credentials, Reitblat said. In that regard, the fraud prevention process has to become part of that fast and seamless process.
"The consumer is using mobile differently, and the fraudsters do things differently in mobile as well, such as trying to run a virtual mobile device on their computer to try to infect a mobile app," Reitblat added.
Forter collects information about a consumer's buying habits and where they generally have goods shipped, as well as collecting cyber intelligence about devices, networks and various connection types that raise red flags.
In addition, Forter incorporates behavioral analytics regarding what a specific consumer generally does when initiating a transaction and how they interact with a keyboard when placing orders.
"We take all three of these layers and mix them together to make sure the transaction makes sense," Reitblat said. "If you claim to be someone, but are behaving like someone else, we can see that by combining all of the data and looking for inconsistencies."
Not a lot of research has been conducted on the small businesses or startups choosing to offer only a mobile channel, but it is readily apparent that many retailers are expanding their support of sales and payments through mobile channels, said Jaclyn Holmes, senior manager of payments insights for Auriemma Consulting Group.
"You are seeing a lot more automated retail sites or kiosks in which you go in and see how different paint colors or furniture would look in your rooms after you download photos of your rooms," Holmes said.
This sort of retail activity appeals to millennial shoppers, half of whom make a monthly online purchase and a third of those are doing it through mobile devices, Holmes said.
As Forter addresses mobile security, it aims to attract more consumers to the mobile channel.
"A barrier right now is the consumer just trusting the retailer," Holmes said. "For the consumer to know it is a secure site, that adds a lot of value."
Mobile security will become critical in the coming months, with a significant focus on Cyber Monday, the Monday after Thanksgiving, when many online and mobile retailers put on big sales. An increase in transaction volume helps Forter because the more data it can collect, the stronger its defense mechanism becomes.
"We were built for the cloud," Reitblat said. "If we have 10 times more transactions on, say, Cyber Monday, nothing different happens to our system because it automatically scales to the flow." Forter can handle more than five million transactions a day.
The company is already preparing for the next phase of security as tech companies place more emphasis on immersive shopping experiences such as virtual reality, Reitblat said. Right now, VR headsets like PlayStation VR and Google Daydream are more focused on gaming and media consumption, but commerce is a natural next step; years ago, banks used to set up shops in virtual worlds like the online game Second Life.
"If everything is virtual, a fraudster can hack an account and 'look' like another person and go into a virtual shopping experience," he added. "It's a few years out, but that will create some challenges."
Forter, which launched its fraud prevention service early in 2014, began its expansion into the U.S. earlier this year after securing a $30 million funding round through Scale Venture Partners.