As the mobile commerce channel continues to surge, a new study finds that merchants are not keeping pace with growth when it comes to fraud and mobile payment adoption. Conducted for the third consecutive year by Kount, Inc., and The Fraud Practice, LLC, the 2015 Mobile Payments & Fraud Survey analyzes fraud and the mobile channel, uncovering trends in payments, new technology adoption, and fraud prevention strategies. Conducted from November 2014 to January 2015, the Mobile Payments and Fraud Survey had 2,000 survey respondents among different industries that are active in payments, risk management and the mobile channel, including merchants, service providers, card issuers, acquirers, and card associations. 

The survey found that merchant awareness is not keeping pace with mobile fraud growth, and the support for the mobile channel is not meeting predictions and expectations as reported by respondents in previous years’ surveys. In addition, concerns over the implementation around new payment methods such as Apple Pay have risen. What’s more, while new tools are available to merchants to meet increased fraud, there is very little consistency in adoption of these tools across industries.

“The data shows that the industry as a whole is further behind on mobile adoption and fraud protection than they were a year ago, and in fact, some are even pulling back from it,” said Don Bush, vice president of marketing at Kount. “It seems everyone knows that mobile is finally poised to make an impact, but the urgency to make sure mobile fraud protection is in place is lacking. To successfully support the growth of mobile, organizations must first ensure IT departments are talking with fraud teams to understand risks and rewards or mobile fraud will grow to a bigger issue in the coming years.”

Exponential growth has led to many organizations’ confusion about best practices in payments and fraud mitigation. This may be one reason there appears to be a slight slow down in adoption and policies surrounding the mobile channel. 

“As barriers to mobile adoption continue to fall and mobile payments of all kinds surge, a green field is emerging for fraudsters,” said Steven Casco, CEO of and the CNP Expo. “What was once not worth their time is becoming very lucrative and companies throughout the e- and m-commerce ecosystem are just beginning to understand how vulnerable they actually are. This report is the most comprehensive treatment of attitudes toward the mobile channel available, examining how merchants and service providers are trying to protect it and how fraudsters are attacking."

“Overall, organizations are earning more revenue and implementing new solutions to meet the needs of customers and merchants in the mobile channel,” said David Montague, president and executive consultant, The Fraud Practice, LLC. “At the same time, there is a noticeable shift from a focus on risk management to managing the complexity of payment methods and channels, including mobile wallets and mobile point of sale payments. Organizations must work to find a balance in managing both as the industry continues to make strides in all aspects of mobile channel development.”

Survey findings include:

Uncertainties Abound:

  • Nearly half of organizations surveyed (40.8%) said they are uncertain if fraud increased following a major data breach and over half (60%) of respondents are uncertain if mobile fraud is growing at a faster, slower or equal pace as their overall mobile transaction volume.
  • Less than 40 percent (39.7%) of organizations can detect if a customer is transacting from a mobile device, and only 17 percent can determine the type of mobile device.
    • Mass merchants are most likely to identify mobile devices by type (45.5%), whereas zero percent of insurance companies surveyed could determine if transactions are coming from a mobile device at all.
    • Gaming/social sites are the only merchant category able to identify all transactions that come from mobile devices, but only one-quarter (25%) can determine the device type.
  • Less than 40 percent (39.4 %) of merchants surveyed track fraud by channel and differentiate it from standard ecommerce transactions overall.
  • Organizations are split on where the fraud originates, as 32 percent indicated mobile fraud was coming from domestic transactions, while 31 percent stated most mobile fraud comes from international sources.

Mobile Fraud Risk Factors Are Misunderstood and Not Prioritized:

•       While mobile fraud is on the rise, more organizations consider the mobile channel equally as risky as, or less risky than standard ecommerce -- 41.4 percent and 7.8 percent for both citations in 2013, and 48.4 percent and 10.4 percent in 2015, respectively.

•       Meanwhile, the share of merchants that believe mobile commerce is somewhat or far riskier than traditional ecommerce both declined, by about 6 percent and 4 percent, respectively.

•       One-quarter (24.2%) of respondents feel mobile requires specialized fraud tools, a decrease from 2013  (32.2%).

•       Nearly one-third (28.4%) of merchants plan to add NO additional tools or services to combat mobile channel fraud.

o   At the same time, more than 37 percent plan to add mobile POS systems; 27 percent plan to add mobile apps for online shopping; and 18 percent plan to create dedicated mobile sites.

New Payment Methods Spike Implementation Concerns:

·       The number of merchants that consider managing the complexity of new payment types the biggest obstacle to mobile adoption more than doubled to 20 percent in 2014 from eight percent in 2013, and has tripled since 2012 (6.5%).

·       Consumers are using various payment methods for mobile transactions: credit cards are the preferred method (62.6%), but PayPal (13.5%) is almost as popular as paying with a debit card (14.5%).

·       Consumers payment methods vary by merchant category: alcohol/tobacco customers are most apt to use debit cards (42.9%); direct response customers are most apt to use PayPal (66.7%); financial services customers are highest users of prepaid/gift cards (12.5%); and dating/social site users are most apt to use Bill2Phone offerings (16.7%).


Mobile Wallet Adoption Spurred by Apple Pay:

  • Less than one quarter (23.7%) of merchants accept mobile wallets, which is the lowest amongst all respondent groups. PayPal is the most accepted form of mobile payment, more than credit cards and debit cards, accepted by 54 percent of merchants.
  • While Apple Pay launched less than six months ago, it already has equal levels of merchant acceptance as Google Wallet; both are accepted by 32 percent of merchants that accept mobile wallets. However, support for Apple Pay (42%) by service providers and non-merchant organizations already exceeds that for Google Wallet (39%).

Fraud Protection Strategies Inconsistent:

  • Respondents are uncertain if fraud tools can be used across channels, with nearly one half (47.4%) reporting that ecommerce fraud processes and tools can’t support mobile fraud risk management completely.
  • Merchants are employing more tools and services to combat mobile fraud, as 79 percent overall say they are using one or two tools while only 40 percent of merchants listed just one service; the number rises to three for merchants with greater than $50M in revenue.
  • Across all organizations, the top three tools for preventing fraud in the mobile channel are reported to be ID authentication (49%), device ID (48%), and secure mobile payment methods (44%).
  • While it is still the most commonly used tool fraud prevention tool by all merchants in 16 different industries, identity authentication use declined in 2014 (38.2%) from 2013 (41.7%).   
  • There are nine industries where at least one-third of merchants use Device ID to prevent mobile fraud, including more than one-half of gaming merchants (57.1%).
  • The top five most common tools or services used by merchants are ID authentication (38.2%), Device ID (35.7%), secure mobile payment methods (30.5%) rules engine (26.6%), and fraud scoring (24%).
  • Use of fraud scoring increased year over year by 38 percent, and the use of text messaging for fraud prevention has nearly tripled in use, up from 7 percent in 2012 to 18 percent in 2015. 
  • Card Associations list fraud scoring in their top three (50%) and acquirers listed NFC as a top three tool (25%). Card issuers were most likely to consider mobile malware detection a top tool (22%).
  • Mobile gelocation tools have also grown in use, now used by 9 percent of all merchants, up from only one percent two years ago.

To download a free copy of the 2015 Mobile Payments& Fraud Survey, visit