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Mobile commerce (mCommerce) is quickly becoming the first choice of consumers across the globe, with over 2 billion smartphone and tablet users expected to make at least one mobile transaction in 2017. Thanks to its appeal to young shoppers, mobile has now surpassed desktop in terms of eCommerce transaction volume. And with consumers in emerging economies increasingly accessing the internet via mobile devices, mCommerce is likely to become the preferred digital shopping method of the future. According to forecasts, more than 60% of total global online retail sales will be made via mobile by 2019.
But while the future looks promising, online retailers still have some way to go before they can effectively prevent fraud losses from this channel. Riskified processes millions of mobile orders for online businesses and obtains important insights into how retailers can adjust fraud operations to better manage these transactions. We are currently compiling a report to share best practices for effectively distinguishing between fraud attempts and legitimate mobile orders, while maintaining a positive customer experience. Following is a preview of the report, which will be published in the coming weeks.
Making the most of mobile
Retailers are increasingly aware of the need to offer a smooth mobile shopping experience, with many promoting themselves as “mobile first”. Despite this, our research reveals that although many shoppers browse eCommerce sites on their mobiles to find the best deals, they’re inclined to switch to their computers to make expensive, complicated, or time-consuming purchases. For example, only 30% of customers choose to do their online supermarket shopping–an often tedious task–via mobile.
To keep mobile shoppers engaged, merchants need to make sure they’re offering an optimized, seamless shopping experience across channels. Getting all the relevant data, visuals and functionality onto a smaller screen is challenging enough. A layer of CNP fraud review should never add any more friction to, or compromise the users’ shopping experience. The process should be invisible, and the only impact on the checkout process should be a higher approval rate. Few things are more frustrating for a shopper than getting falsely declined after entering their name, address and credit card details on a small onscreen keyboard.
Where is the risk in mobile sales?
Systems built to detect fraud in desktop orders are often inaccurate when processing mobile transactions. For example, retailers may misinterpret legitimate mCommerce behavior as ‘risky’ due to the nature of cellular connections, which act differently. To improve fraud detection capabilities and minimise false declines, retailers need to leverage technology that will allow them to collect unique behavioral data from mobile users; invest in their ability to track users across devices; and make sure that rules or machine learning models “make sense” in the context of mobile.
The good news is that mobile orders are currently safer than purchases made via desktop. Our data shows that online retailers can safely approve 95% of mobile orders (compared to 90% of desktop orders). However, the rate of CNP fraud is not equally low across all types of mobile orders. Riskified’s data shows the rate of fraud attempts in mobile orders for digital goods is four times higher than in tangible goods mobile orders. In fact, digital goods orders placed via smartphones or tablets are more likely to be fraudulent than similar orders placed via desktop. The higher rate of fraud in mobile orders of digital goods may be explained by the fact that most retailers use fraud systems developed to detect CNP fraud in physical goods purchased via desktop. Despite this risk, merchants should still be able to approve almost 80% of mobile transactions involving digital goods.
Read the full report later this month for more
These are just some of the insights included in our report on CNP fraud in mobile sales. The report will be published at the end of April, and will cover topics such as:
- How the rate of mobile fraud fluctuates throughout the day
- The demographic differences that impact mobile shopping behavior
- How fraud and user patterns differ across the globe
- Correlations between the type of purchase and likelihood of fraud in mobile