UK shoppers are expected to spend a collective £27bn on m-commerce this year, which equates to 28% of total European online sales – as the rise of card-not-present sales continues.
By the end of 2017, the Centre for Retail Research believes that 40.1% of all UK ecommerce sales will take place via mobile devices, due to a number of factors, including growing consumer trust in m-commerce as well as investments and improvements to user experience on smartphones and tablets.
2016 was considered by many as the breakout year for m-commerce, with 86% of UK shoppers making a purchase via smartphone over those 12 months. While this growth in m-commerce is being led by consumers, merchants play a major role in the growth of card-not-present purchases. This includes purchases made online (e-commerce), over the phone, or via mail order.
As consumers continue to move towards one-click and contextual commerce, merchants have had to adapt. Recent research found that 81% of e-merchants have a mobile website, 82% of mobile websites have generated sales, and, most interestingly, 53% of sellers generate at least 10% of their sales via mobile.
While m-commerce is positive for merchants in many ways, opening up new revenue streams and reducing bricks-and-mortar costs, there have also been significant challenges. As merchants battle for consumer dollars, they aim to make payment process ‘frictionless’ by removing as many barriers to the sale as possible. From a customer perspective, less is more as they are able to make a purchase almost instantaneously. However, for merchants, this has manifested in minimal customer data being required to finalise a payment. As expected, this raises security issues – particularly in the case when a merchant needs to dispute a chargeback but has minimal customer or sales data available to make their case.
What preventative measures can merchants take to protect Card Not Present sales?
The rise of card-not-present purchases brings with it many benefits, while also creating a new set of questions and potential issues for retailers. Further, 25% of retailers who responded to the 2017 Mobile Payments & Fraud report said that the mobile channel was a higher risk than established e-commerce channels.
Without the card or cardholder present in m-commerce transactions, the merchant’s ability to determine if the customer is the authorised cardholder is limited. However, one thing the merchant can rely on is data, as for this reason the importance of data in m-commerce sales should not be underestimated.
Lessons can be learned from highly successful m-commerce businesses and with apps such as eBay, Starbucks, Amazon, Square and Uber. These companies all have data collection capabilities integrated into their app, so that payments can occur in a timely and frictionless manner every time. This data is usually collected one time when the app is initially installed, and can then be used going forward to verify the customer’s identity and prevent fraudulent transactions from occurring.
The more information a merchant can derive from a consumer at their first point of contact or sale – while setting up the app or making a first purchase – the better prepared the business can be to identify and prevent potentially fraudulent activity.
M-commerce growth is undoubtedly set to continue, with eMarketer predicting the UK market will be worth £58.5 billion by 2021, accounting for 51.7% of all UK retail e-commerce sales. Thus, having a clear fraud prevention strategy for card-not-present purchases, particularly those made on mobile devices, should be high on the priority list for merchants.