Even as Target and other retailers try to get a handle on the massive credit card fraud incidents in recent months, merchants may be ignoring potential fraud from mobile payments.
Fraud threats are impacting merchants to the tune of $283 for every $100 of actual fraud loss through the mobile channel, a new report from LexisNexis and Javelin Strategy & Research found. In fact, fraudulent mobile transactions cost small businesses three times the actual cost of the transactions.
Notably, small retailers that accept at least one type of mobile payment protect their business with fewer fraud-prevention solutions than larger companies, the report found. Smaller mobile merchants on average only use two different types of fraud-prevention technology, such as signature authentication, IP geolocation and browser/malware tracking, compared to large businesses, which use an average of four types.
Unfortunately, mobile merchants also face more identity theft. "Despite the surge in retailers using mobile payments to conduct business, we've found in our study the unfortunate correlation between the size of the business and the impact of mobile fraud on their business," said Dennis Becker, vice president of corporate markets and identity management solutions for LexisNexis.
Retailers need to be concerned about mobile payment fraud because of the incredible growth in mobile transactions. Nearly one in 10 merchants accepted mobile payments in 2013, and 25 percent of non-mobile merchants expect to begin accepting payments through this channel in the next year.
55 percent of mobile retailers accept payments through mobile browsers, while 38 percent utilize mobile apps. However, the largest growth channel is the emerging mPOS hardware, which seven percent of mobile merchants accepted in 2013.
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