M-Commerce and Frictionless Payments

Customers want the simplest possible method of buying and paying. This ideal experience applies to all transaction types—in-store, online, mobile, and phone. Just as no one wants to stand in line for 20 minutes to buy an item, no one wants to be forced through multiple web pages to complete a purchase. For a card not present merchant, this can cause problems.
Today, customers are demanding a simple, frictionless shopping experience. Merchants are being forced to deliver or risk losing out to competitors who have integrated frictionless payment systems. Again, for card not present merchants, this is a problem.
The reality is that m-commerce, which can accommodate a wholly frictionless payment solution, is ideal—but should it be the goal? So many merchants are rushing to meet customer demands without considering the full ramifications of this move.
Missing Out on Crucial Card Not Present Customer Data
The biggest problem for merchants is in the data that is not available with frictionless payments. Most frictionless payments require minimal data input and interaction with the customer. This results in very little customer data being available to the merchant. Customers are happy because they’re able to buy instantly and seamlessly, but merchants can be left with many questions.
Specifically, merchants need to know who they are dealing with. The data that is not being provided during a truly frictionless payment experience is critical to enforcing an effective fraud prevention strategy. Remember, it’s in knowing who is browsing, buying, selling, and accepting delivery of products and services that allows insight into fraud risk.
The problem then becomes this: How to best serve the needs of the booming m-commerce market as a card not present merchant, yet still maintain an effective fraud prevention strategy? Is it worth risking losing out on the sales that m-commerce is generating?
On Black Friday in 2016, e-commerce sales in the U.S. reached $3.34 billion. This amounted to 21.6% growth over 2015. The m-commerce share of these sales was $1.2 billion, accounting for 33% growth over 2015.
This trend towards m-commerce purchasing is certainly not a one-day spike. Recent research shows that m-commerce in 2017 represents 19% of all U.S. retail e-commerce sales, and this figure is expected to reach 27% by the end of 2018.
The looming question highlighted above remains: How to ensure effective fraud prevention when frictionless payment means minimal data?
Real-Time Data for Real-Time Fraud Prevention
Too many merchants mistakenly believe that a fast and simple payment solution is more difficult for fraudsters to hack. However, the opposite is the case—the simpler the solution, the easier it is to break into it.
The verification and confirmation steps used during traditional e-commerce inherently make it more difficult for fraudsters to break in and steal data. When these verification steps are removed in efforts to deliver customers the ideal frictionless payment scenario, the result is less opportunity to catch and stop fraudsters.
The good news for merchants is that even with payment solutions in emerging technologies there is still opportunity to collect data. The key to this data collection is in configuring the frictionless payment solution with simple steps that allow data collection to occur quickly and unobtrusively.

  1. Implement a Downloadable a mobile app:  This requires some form of user identification and the opportunity to collect IP address and geolocation data.
  2. One-time data entry:  The customer is required to initially enter a credit card number and CVV code to register and set up the mobile app. Now, the credit card number and customer name are connected and retained in the merchant’s database.
  3. Streamed delivery:  The m-commerce purchase is streamed or downloaded instantly to the mobile device (except for Starbucks, for example, in which human contact is still required). This streamed delivery provides more data such as customer location (address verification) and how the customer is shopping (device intelligence).

With this method of m-commerce configuration, merchants can collect key data points that can then be analyzed in real-time during the purchase. With a real-time accessible database that uses intelligent rules systems and instant data analysis, merchants are better able to catch fraud in action—even during frictionless sales.
Although there is less data available for analysis with m-commerce, when the correct solution is in place even this thin amount of data can be used effectively to stop fraud before it happens. Merchants do not want to risk missing out on the huge sales opportunities offered by m-commerce, but this drive to seize sales opportunities should not be done in a rush that neglects fraud prevention. The customer wants frictionless payments, but the customer does not want their data and identity stolen.
Be the smart merchant and lead the way to reducing fraud in the payments ecosystem. Partner with the Verifi experts to deliver a frictionless payment solution, which delivers a seamless experience that is working behind-the-scenes to prevent fraud before it happens.