While predictions show that more than 60% of online sales will be made via mobile by 2019, retailers will never reach that number if they don’t offer a safe and easy way for consumers to complete mobile transactions.
According to new research from Riskified, retailers can and should safely approve 95% of mobile orders. Although mobile orders for digital goods see four times as much fraud as orders for physical goods, almost 80% of digital goods purchased via mobile are valid, compared to almost 96% of physical goods.
The rate of fraud fluctuates depending on the time of day. According to the research, the highest number of CNP fraud attempts happen via mobile orders placed between midnight and 6 a.m.
But more mobile usage does not necessarily mean an increase in fraud. For example, while mobile sales increased almost 30% last year around the holidays, the rate of fraud did not. In fact, 98% of mobile purchases placed in the last two weeks of the year can be safely approved.
Adoption thus far of mobile purchases varies greatly by retail vertical. For example, while only 22% of electronics and 29% of food items are ordered via mobile, 50% of all cosmetics purchases are made via this channel.
The rate of fraud also varies depending on the product. For example, mobile transactions over $1,000 are three times more likely to be fraud attempts than those worth less than $200. In fact, more than 96% of mobile orders within this lower price bracket are valid, versus only 91% of those made via desktop.
The use of promo codes is often a good indication of a legitimate order. Retailers can safely approve 97% of mobile purchases with promo codes and mobile shoppers spend nearly twice as much per order when they have a discount.
However, this good fortune for retailers and consumers won’t last.
“It's a little surprising that fraudsters haven't yet migrated more to mobile. Fraudsters tend to be technologically sophisticated, so one might have guessed that they would be leading the way with mobile, but it isn't so,” Senior Fraud Analyst Emilie Grunzweig at Riskified told FierceRetail. “We don't expect this pattern to continue. We're seeing more and more fraudsters and fraud attempts—particularly in industries that are appealing to younger/tech savvy consumers. But for now, mobile is generally a safer channel.”
Security and ease are not the only hurdles for consumers. Some of it is simply behavioral—consumers need to get comfortable with using the technology. Also, some items are not as suitable for purchasing via mobile as they are for desktop. For instance, purchasing an airline ticket requires completing a lot of fields, which is more difficult on a mobile device.
“Consumers are getting more comfortable with the idea of shopping via mobile, and retailers are recognizing the importance of the channel. As that comfort level increases, we'll see that growth in shoppers using mobile devices. Retailers adapting and improving their systems to mCommerce shopping behavior will also be a factor,” Grunzweig added. “Not recognizing and adjusting for the channel means those purchases may be held up and the customer experience may suffer. Retailers will get smarter about these differences, and those barriers will come down."