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Survey shows increasingly complex world of mobile payments

Chad Dryden, marketing director at The Record Exchange, files away used vinyl records to sell in-store. A new study by Kount shows more businesses are boosting their sales by also offering sales online like the Record Exchange does, but as electronic payment methods increase business owners have a harder time tracking and protecting sales. Photo by Glenn Landberg.

Chad Dryden, marketing director at The Record Exchange in downtown Boise, files away used vinyl records. A new study by Kount shows businesses like the Record Exchange are relying more on mobile sales, but in doing so are increasing their risk of fraud. Photo by Glenn Landberg.

New online commerce options are making life easier for thieves and more difficult for retailers to protect themselves, according to a new survey about mobile payment.

Kount, an electronic commerce security firm, conducts an annual survey on market changes. For its 2017 report, Kount surveyed 800 merchants in 14 countries and more than 30 industries.

The survey shows that mobile fraud increased 40 percent in 2016, and the number of data breaches grew by 48 percent. At the same time, the electronic commerce sector added 18 new payment options for business owners to consider adding to their websites.

Overall, mobile fraud is getting easier for the bad guys and harder for the good ones as new technology increases the options for selling, but exposes sellers to new risks, said Don Bush, vice president of marketing at Kount.

“The mobile fraud landscape is getting hairier and hairier to navigate,” Bush said.

All of this is happening at a time when customer demand is causing many businesses to prioritize mobile payments.

Only 12 percent (of business respondents) said mobile payments decreased or stayed the same last year, Bush said. All other respondents reported an increase.

“If you look at revenue versus projections, about 20 percent of companies earn 5 percent or less of their revenue from mobile today, but those same people think they will be earning 40 percent of their revenue from mobile in the next few years,” he said. “Pretty soon there will be nearly 60 percent of companies earning 30 percent of their revenue from mobile commerce, according to their own predictions.”

As businesses increase their options for accepting mobile payments, they need to consider how each will work with their security tools. Some won’t accept payments from legitimate sources.

“One of our challenges right now is addressing false positives and getting a good handle on what is occurring and sectioning out what real customers are doing that is being flagged as malicious or suspicious,” Justin Staskiewicz, fraud analyst at the Wendy’s Company, said about security tools blocking payments from customers.

“False positives are costing way more in loss revenue than actual fraud is,” Bush said.

Businesses can limit their risk by limiting the number of payment options they use.

According to Kount’s survey, credit and debit cards and mobile wallets are the most popular payment methods among customers.

More than half of the surveyed businesses said customers prefer mobile wallets – where payment information is stored on a phone instead of a plastic card. That surprised Bush, who said that number was far different than the  number of merchants who accept mobile wallets — 22 percent

“I feel there is still some question from consumers about how secure mobile payments are and I feel that when they are able to put a secure step between themselves through PayPal or Apple Pay, it allows in the mind of the consumer for there to be additional protections and makes it easier to complete the transaction,” said Greg Andrews, director of risk management and fulfillment at Entertainment Benefits Group.

Of the 50 or so mobile wallets available to businesses, PayPal was used by 58 percent of surveyed businesses, Apple Pay was used by 48 percent and Android Pay was used by 38 percent. No other mobile wallet was used by more than 30 percent of the businesses, according to Kount.

“Merchants are going to have to think long and hard about what wallets are important to their customers and what they want to include on their websites,” said D.J. Murphy, Editor in Chief at CardNotPresent.com.

Andrews said his company uses PayPal because it is widely accepted and has been on the market for a long time.

Mobile wallets or any single payment option aren’t enough to protect a business from fraud. But being careful about choosing payment options, and keeping a narrow focus, can reduce the risks, Bush said.

The electronic payment options that are most popular among customers according to about 800 business owners surveyed by Kount. Data from Kount's 2017 Mobile Payments and Fraud Survey.

The electronic payment options that are most popular among customers according to about 800 business owners surveyed by Kount. Data from Kount’s 2017 Mobile Payments and Fraud Survey.

Mobile Fraud 3 There are several differences between the electronic payment methods businesses accept and the ones they hear are important from customers. About 800 business owners surveyed by Kount said they believe the mobile wallet will rise in popularity over the next few years. Data from Kount's 2017 Mobile Payments and Fraud Survey.

There are several differences between the electronic payment methods businesses accept and the ones they hear are important from customers. About 800 business owners surveyed by Kount said they believe the mobile wallet will rise in popularity over the next few years. Data from Kount’s 2017 Mobile Payments and Fraud Survey.

About Benton Alexander Smith

Benton Alexander Smith is a reporter for the Idaho Business Review, covering the Idaho Legislature, new business, technology and financial services.

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