Mobile retailers are being hit harder than any other merchants by credit- and debit-card fraud—and most m-commerce retailers appear resigned to being victims, Pymnts reported on Monday (Sept.23).
According to a new "True Cost of Fraud" study by Lexis-Nexis, mobile merchants are the only group that have not benefited from the overall decrease in payment card fraud as a percent of revenue observed in 2013. The study also concluded that mobile retailers will continue to be a target as more fraudsters migrate to the mobile channel, which isn't yet as mature as e-commerce or in-store.
The study found that merchants paid $2.79 per dollar of fraud in 2013, up from $2.69 in a 2012 study. The jump was due to an increase in online fraud—and it's mobile commerce merchants that were found to have paid the greatest fraud losses.
"In the mobile space, all the focus has been about usability," Ehsan Foroughi, the director of research at Security Compass, told Pymnts. "Security has been put aside for the longest time. Now that there are billions of users and lots of opportunity for the attackers, it is becoming a battleground that has minimal defense prepared."
That shows up in the Lexis-Nexis numbers. E-commerce merchants saw the biggest improvement in fraud rates in the study—as a percent of revenue, fraud dropped to 0.53 percent from 0.60 percent the year before. But mobile merchants average fraud losses equaling 0.75 percent of their revenue. And while e-commerce merchants have largely decided that fraud mitigation boosts sales and customer retention, mobile merchants are more likely to see it as hopeless. Almost one-quarter of m-commerce retailers—24 percent—said fraud costs are too much to control, more than any other merchant group.
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