Mar 01 Small Businesses Use Too Little Fraud Prevention for Mobile Payment Systems
A LexisNexis and Javelin Strategy & Research report says small businesses accepting at least one type of mobile payment from apps, point-of-sale systems or browsers maintain fewer fraud-prevention solutions than larger companies.
The report is based on a survey of 1,139 risk and fraud “decision makers and influencers” at both small and large companies using a variety of payment systems
Drawing upon the report, inc.com’s Will Yakowicz writes that smaller mobile merchants on average use two different types of fraud-prevention technology while larger businesses use an average of four. The technologies range from signature authentication, check verification services and transaction and customer profile databases to IP geolocation, real-time transaction and browser/malware tracking.
Sadly for smaller businesses the study finds that fraudulent mobile transactions end up costing three times the value of the actual product stolen! The reason? Payment-processing fees, fraud investigation and costs for restocking stolen goods.
Why spend money for fraud prevention when the cost is greater than what’s stolen? Maybe because cybercriminals are also aware that small businesses generally have less protection. So who are they more likely to attack more often? And, when customer satisfaction and reputation come into play, at what point does it become more cost-effective to have as much protection in place as possible?
Dennis Becker, vice president of corporate markets and identity management solutions for LexisNexis, observed that “Mobile payment options and point-of-sale hardware are providing more business opportunities for small merchants. 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.”
Below are prevention techniques the study suggests ought to be put in place:
• Thorough authentication of mobile device transactions.
• Tracking fraudulent activities by every possible channel. Currently, about half of mobile merchants track fraud only by the payment channel.
• Maintain open communications with financial institutions and other mobile merchants to better understand the evolving nature of fraud threats and solutions. Consortia such as the Merchant Risk Council provide forums for sharing expertise and assessing concerns.
ThreatMetrix builds trust on the Internet by offering market-leading advanced fraud prevention and frictionless context-based security solutions. These solutions authenticate consumer and workforce access to mission critical applications using real-time identity and access analytics that leverage the world’s largest trusted identity network.
ThreatMetrix secures enterprise applications against account takeover, payment fraud, fraudulent account registrations, malware, and data breaches. Underpinning the solution is the ThreatMetrix™ Global Trust Intelligence Network, which analyzes over 500 million monthly transactions and protects more than 160 million active user accounts across 2,500 customers and 10,000 websites.
The ThreatMetrix solution is deployed across a variety of industries, including financial services, enterprise, e-commerce, payments, social networks, government and insurance.
For more information, visit www.threatmetrix.com or call 1-408-200-5755.