Paying for groceries with a hover of the wrist over a point of sales terminal. Ordering and paying for coffee on a mobile app. These methods of paying are quickly becoming the standard.
Just as digital streaming hastened the demise of video rental stores, the same is happening to the overstuffed wallet packed with credit, debit, and store cards. Replaced by their digital cousins, consumers now have the ultimate convenience in buying and payments. And merchants have the added benefit of an always-on and ready-for-business sales model.
Of course, with this convenience economy comes the heightened risks of payment fraud. As merchants know, every new payment method brings with it inherent risks. The good news with mobile payments is that the very technology that makes it possible for customers to tap, swipe, or hover also provides a layer of security.
The key, however, is in not depending on this as the sole source of mobile payment fraud protection. Just as merchants want to grow their revenue, so do criminals. Hence, the constant drive for fraud detection improvements and the need for everyone involved in payments to commit to real action.
Mobile Payments Are Here to Stay
It’s not just groceries and coffee that have cracked the mobile payments scene. Now consumers expect to pay for everything digitally: when choosing a product or service, consumers want to pay for it with ease and convenience.
An entire infrastructure of businesses has been born out of this ubiquitous mobile payment environment. From online banking to budgeting apps that track mobile payments and to digital loyalty programs and mobile-only sales, mobile payments have become big business.
Recent research from The Statistics Portal, tracking the global mobile payment revenue, highlights this trend: $450 billion in sales in 2015 is projected to exceed $1 trillion in 2019.
Merchants across all industries are desperate to harness this sales and revenue potential. Mobile payments technology has these three advantages for merchants:
- Larger customer base. With mobile POS and m-commerce options, merchants are able to sell to a wider, more diverse customer base. Providing customers multiple payment options reduces barriers to sales.
- Happier customers. Customers want convenience. Giving customers control over how they pay for their purchases enhances their buying satisfaction.
- Cost savings. The convenience of mobile payments allows merchants to reduce their infrastructure needs, in regard to the lower cost of operating an m-commerce store versus that of a brick-and-mortar store.
Merchants must appreciate that these advantages come in a very tight marketplace. Consumers expect seamless, fast, secure, and easy-to-use m-commerce and mobile POS experiences. The moment there is a problem with the app, entering a password, or a delay in authorization, the customer could be lost to a competitor.
Managing Mobile Payments Fraud Challenges
With any new change in payment methods, there is a risk for payment fraud. Mobile payments, even with intelligent technology allowing for instant authentication and authorization, are not immune to fraud risk.
By identifying key fraud challenges, merchants can implement the solutions and technology that uniquely work for them. Relying on an off-the-shelf approach to mobile payment fraud detection and prevention may not be the right approach.
- Minimal transaction history. Not having a customer transaction history can make it challenging to track abnormal purchasing behavior. Using device authentication and fingerprinting technology can help verify the customer identity.
- User error. Smartphones have small keyboards, making it easy for customers to incorrectly enter passwords or credit card data. Take advantage of technologies that allow secure data storage paired with geolocation security to enhance customer identification.
- Slow mobile site loading. Some mobile sites and apps are slow to load, due to the fraud detection technologies being used. Consider using a multi-factor authentication to work around this latency.
Merchants cannot be expected to become experts in identifying mobile payment fraud risk and then determining the right fraud prevention solutions. For this, we urge you to rely on the experts at Verifi.
We specialize in payments solutions that work for you to detect and prevent fraud. Our Global Payment Gateway provides robust and customizable options for merchants who want comprehensive payment fraud protection. Contact us to learn how our “Super Gateway” can protect you from payment fraud, while simultaneously allowing you to take advantage of the booming mobile payments environment.