Now that the year has begun, it is almost inevitable to think about trends, about what 2016 will bring us. Mobile payments are one of the trends that concern many companies. The rise of mobile payments has brought a reinvention of traditional payment systems, in general, and it has gone even further than that: companies have had to adapt their marketing strategies to different channels, change their approach toward the consumer, and evaluate their data security and fraud prevention protocols.
So, the expression “know your customer” acquires a much broader dimension: know your customer not just to give them what they want when they want it, but also to learn who the customer is. The customer wants the company to know them in order to maximize their personalized experience; and the company wants to know the customer in order to provide them that personalized experience so that they buy, and especially, so that they come back. At the same time, knowing the customer, that is, identifying the customer, finding out who the customer is, helps reduce fraud, which benefits both parties.
Another of the questions we are facing this year is what will happen with fraud in mobile payments. The increase in mobile transactions, especially during vacation times or times of increased retail purchases (e.g., summer vacations, Christmas shopping, Black Friday, etc.), will surely continue to bring an increase in online fraud, as we have seen in previous years.
To support these ideas with numbers, some studies note that online fraud in the retail sector will increase 106% in the United States alone, and card-not-present fraud, which includes online payments, is expected to be four times greater than point-of-sale fraud by 2018.
On the other hand, online identity verification fraud prevention systems are increasingly disruptive and efficient. If we also consider the companies’ greater awareness of the benefits of adopting these systems, both for customers and for the companies themselves, we can expect that online fraud rates will at least be mitigated.
In this sense, detecting online fraud strategies is key. The most common form of online fraud is identity fraud from stealing credit cards or identity cards, or even by falsifying information. Actions to mitigate the effects are sometimes counterproductive for the user, since they add “extra” steps in the online payment process. Conversely, in other cases, the user is prioritized to the detriment of security, which is what happens when purchases by unregistered users are allowed in order to prevent abandonment during the purchase process.
But what becomes even more essential is the change in the companies’ mentality: it is no longer necessary to choose between the user experience and security. This was an emerging concept in 2015, and it will be key for any company and industry in 2016.
In sum, we can expect that in 2016, with the increasingly greater trend toward mobile payment, the fraud rates will also increase, and the hacker strategies to get data and identities will be perfected. However, more and more, companies have more effective, fast, and customer-friendly systems to verify online identity.
Based on this scenario, we can expect that fraud rates will tend to be much more dichotomous according to the industry and the company.In other words, fraud rates will be drastically reduced for those companies who are pioneers in adopting disruptive online fraud prevention solutions, and rates will increase in those that do not adopt offline or manual systems, or that continue to use obsolete systems known by hackers and similar entities.