New Study Tracks Shift of Retail – and Fraud – into Mobile Domain

Passwords and PINs

“Previously dominant forms of mCommerce authentication such as passwords, credit card and address verification, and security questions are becoming increasingly ineffective and irrelevant.”

Research and Markets has issued a new mobile retail report based on several 2012 Javelin Strategy & Research surveys. The report, “Online And Mobile Retail Payments Authentication: Preventing Fraud in the Age of Data Breaches and Malware”, notes that mobile commerce is on the rise and retail fraud is following suit.

The report notes that Chip and PIN systems’ increasing presence at physical POS terminals has pushed down real-world retail fraud, but as in so many other kinds of crime, pushing it down in one place just makes it rise up somewhere else – in this case, in mobile commerce, where fraud has emerged mostly in the form of malware and data breaches. As such, the previously dominant forms of mCommerce authentication such as passwords, credit card and address verification, and security questions are becoming increasingly ineffective and irrelevant. Newer technologies such as one-time, out-of-band password systems and biometric authentication have emerged as viable replacements.

The report urges merchants to embrace these new security technologies so that the mass market can acclimatize to them, and indeed, that’s exactly what companies trying to pioneer mobile commerce are doing, as we have seen with the recent launch of Apple Pay. It’s too soon to say how successfully the mobile payment platform will penetrate the mass market, but Apple has managed to get a number of retailers on board and is seeking to assuage consumers’ security fears with its integration of the fingerprint-scanning Touch ID system installed on its newest mobile devices. Some smaller smartphone manufacturers, meanwhile, have wasted no time in jumping on the biometric security bandwagon, seemingly in anticipation of retail’s inevitable shift into the mobile world.

October 23, 2014 – by Alex Perala