In the world of finance, companies and service providers are looking for new solutions. Mobile payments are often touted as the next big thing in the industry. Unfortunately, these types of transactions are also subject to a high degree of fraud. In fact the year 2015 was a horrible year for mobile payments fraud. Solving this issue will be quite problematic, to say the least. If nothing is done, fraud rates will increase by another 250% in the next few years, though.
Tackling mobile payments fraud is the main priority for a lot of companies. Even some fintech start-ups are focusing on this particular problem. It is not easy to counter a problem that has been around for many years now. Mobile financial transactions aren’t even commonly used by consumers and retailers just yet. However, criminals have already come up with ways to successfully exploit these payments and commit mass fraud. During 2015, mobile fraud accounted for US$10 7bn, which is an alarmingly high number.
Mobile Payments are a Wolf in Sheep’s Clothing
Unfortunately, things will only grow worse from here on out. It is expected mobile payment fraud will reach US$25.6bn by 2020. That is, assuming no solutions have been found by that time. Right now, it doesn’t look as if we will see any major improvements in this department any time soon. Moreover, there are different kinds of mobile fraud to take into account as well. Identity theft is the main culprit, as is to be expected. It accounts for nearly 71% of all fraudulent mobile payments in 2015.
Loyalty fraud is by far the most difficult concept to protect against. It revolves around fraudulent appropriation of loyalty points, which are either sold off or transferred to different users. There is also friendly fraud, which comes in the form of legitimate orders getting disputed. This is not as common, though, but it is still a problem. Sometimes, consumers forget they have placed an order in the first place. It creates a lot of hassle and paperwork for merchants to process refund requests, though.
It is evident both consumers and businesses need to protect themselves against mobile payments fraud moving forward. That is much easier said than done. Some solutions exist already, such as custom m-commerce protection methods. Additionally, always ensure customers effectively intend to make a purchase before taking their money or shipping items. There is a lot of work to be done, that much is evident. Mobile payments are a blessing and a curse at the same time.
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