Seizing the mobile payments opportunity – By Akif Khan, Director, Products and Services, CyberSource


Many of today’s retailers are considering how they can best address consumers’ desire to purchase goods and services using smartphones and mobile technology. Figures in the latest 2012 UK Online Fraud Report from CyberSource suggest a growing number of businesses now have a mobile channel – defined as commerce on a mobile-optimised website or through a mobile app.

With 38% of respondents now offering a dedicated mobile website and 26% their own app, the challenges of managing fraud across multiple channels are a reality for many. Today just 16% of online businesses are tracking fraud through their mobile apps. This could be for a number of reasons. One possible factor is that because the identity of the handset owner is known, the risk may be perceived to be lower.

Retailers’ understanding of fraud in the mobile channel is largely unknown. In CyberSource’s North American edition of the report as many as 92% of survey respondents did not know their mobile fraud rates. 7% perceived that mobile fraud rates are the same or lower than online fraud, while 1% perceived mobile fraud to be slightly higher.

There are two schools of thought concerning the way fraud may impact on m-commerce. One says mobile may be riskier because it is a new channel and harder to identify the device or IP address. A second school of thought, however, believes just the opposite. For example, access to the internet via a mobile network is easier to monitor, users may protect their phones with passcodes and mobile devices are more likely to be used in public.


A mobile offering provides retailers with the opportunity to reach consumers while on the move – giving them more choice and the flexibility to shop on their terms. UK online nursery and baby care retailer Kiddicare is one of the trailblazers in developing its mobile channel. Such was the demand that, as Simon Harrow, COO, revealed in a recent interview, ‘We had our first mobile order four minutes after going live.’ Significantly, Kiddicare offers customers the same experience and catalogue irrespective of the device being used to purchase items.

According to eConsultancy, the majority of the UK’s most popular online retailers have adopted mobile commerce, including Tesco, Amazon, Currys and Comet. Of the 10 travel brands on the list, however, just four have some kind of mobile site or app.


It is too early in the evolution of mobile to have a good view of how fraud rates may differ. One recommendation is that businesses look to employ different screening processes for their e-commerce and mobile channels – preferably via a common platform.

As an example, e-commerce fraud screening traditionally incorporates checks on a buye’s IP address as part of the purchase process. For instance if the buyer states that they live in London but the IP address identifies a different location the order could be interpreted as being suspicious. In the mobile space such results could be misleading. This is because an IP address may be associated with the operato’s office or datacentre address rather than where the device happens to be located at the time of transaction.

Retailers may also look at the time an order is placed to help determine how risky it is – depending on the nature of the business, very early in the morning or late in the day may be considered unusual. In the new mobile paradigm the time of the transaction could be a less reliable indicator of fraudulent activity. Given the freedom that the mobile channel affords consumers, the buyer could, for example, be using their phone on the train early in the morning while on the way to work.

Addressing mobile

Retailers looking to embrace the e-commerce opportunity should consider adopting a common platform that is capable of screening fraud across multiple channels, yet has the flexibility to allow different strategies to be applied to different sales channels.

In CyberSource’s latest UK fraud survey, only 25% of respondents stated that they are tracking fraud from their mobile site. Yet the barriers to fraud may be lower via this channel, with user experience considerations forcing a reduction in the quantity of information collected at purchase. As the channel continues to grow in significance, retailers will need to understand how fraud impacts m-commerce.

Nearly two thirds of the online businesses that track fraud on their mobile channels are doing so using their existing fraud tools, with the remaining 38% applying different toolsets and strategies. This varies between sectors. For digital goods businesses 55% are using different processes; for travel it is 19%. This may be because the digital sector is newer, more technology focussed and has the latest infrastructure, whereas the travel industry is more established and so has a huge array of legacy technology to contend with. With this in mind, organisations should ensure that their fraud tools are suitably configured to take into account the characteristics and attributes specific to each channel – such as the chances of a successful geographic IP lookup on a mobile device.

Tracking back

Companies should ensure that they can track orders, as well as fraud, by order channel. Internal tracking and reporting systems should ideally be sophisticated enough to reconcile a fraud chargeback with the original transaction, irrespective of order channel.

Interestingly, one fifth of online businesses don’t track fraud by order channel at all. This is significant for a number of reasons. From a reporting standpoint, lack of tracking could hide the fact that fraud is higher for orders originating from a certain channel. Furthermore, without such information an effective response can’t be put in place (such as being able to update order acceptance rules for a specific channel only, rather than across the board).


73% of UK businesses trading over the internet forecast online revenue growth in 2012. Where retailers are seeking to leverage the mobile opportunity as part of their growth strategies, I advise them to work with partners that understand the nuances of mobile commerce. I would advocate that they adopt a single platform which has the ability to integrate multiple sales channels, alongside the flexibility required to track orders, as well as potential fraud, by sales channel. By adhering to best practice principles retailers can make the transition from multi- to omni-channel retailing as painless as possible.

Sources: Unless otherwise denoted, all figures are sourced from the 2012 CyberSource UK Online Fraud Report