What is mcommerce?

Mobile commerce, commonly referred to as mcommerce, is the use of mobile devices and apps to purchase products online. Mcommerce includes everything from shopping, online banking, paying bills, and mobile app subscription services, and has quickly become an important revenue stream for digital shopping.

The rise of mcommerce

In 2022, mobile phones generated 60.66 percent of all internet traffic, while desktops and tablets generated only 39.34. percent. With over seven billion people in the world owning a smartphone, consumers have plenty of opportunity to do their shopping and take care of their finances without having to invest in a computer. Also, with multiple people living in the same household and, typically, an insufficient number of computers for each individual person, people tend to use their mobile devices to get online more often.

Mobile devices and the supporting infrastructure have long since caught up to desktops, and provide a nearly equal web experience and internet browsing speed. Shopping on mobile also fits perfectly with the lifestyle and consumption behavior of today’s consumers, especially digitally native millennials and Gen-Zers.

Digitally adept merchants recognize the need to meet customer preferences for frictionless mobile experiences and have invested heavily in their mobile offerings to do just that, creating their own apps and optimizing their websites for mobile browsing and shopping. 

Mcommerce has raised the bar for customer expectations of convenience and speed. Whenever and wherever necessity or inspiration arises, smartphone users need only travel as far as their pocket to make a purchase. Merchants are actively capitalizing on this by promoting quick and spontaneous purchasing with features like one-click checkout.

Benefits

Mcommerce is an important evolution in the digital, retail, and ecommerce worlds, for both customers and merchants. It opens the door for:

• A wider audience and better customer experience: Customers have the ability to shop on their phones, and merchants expand on their audience and reach those who don’t necessarily use desktops or laptops. 
• Growth potential: Mobile commerce sales are expected to make up over 10 percent of all US retail sales by 2025, a steady increase from 3.5 percent in 2018.
• Payment options: With mcommerce, customers have a variety of payment options to choose from like Apple Pay, Visa Checkout, PayPal, and more. Many mobile sites and apps also offer an option to save a preferred method of payment, allowing for faster, one-click checkout.
• Quick browsing and transactions: Mobile apps provide customers with a better online experience and faster transactions.

Challenges

• A challenge of mcommerce is that it often leads to higher friction than desktop experiences, because of aspects such as limited screen and scrolling space and smaller form fields in the checkout process. 
• Customers abandon their cart during checkout at a higher rate on mobile because of the friction added by third-party payment processing sites or a generally poor mobile checkout experience. And when it comes to payment, both entering and saving payment information is risky – on the one hand, having customers enter payment information in tiny form fields (which leads to errors and friction) creates losses for merchants, and on the other hand, saving payment information makes customers more vulnerable to fraud.
• Many merchants haven’t adapted their fraud prevention solutions to mobile – commonly applying the same fraud-management tactics and strategies they use for their overall ecommerce operations to their mcommerce channels and orders – making mcommerce an easier target for fraudsters. 

4 mcommerce fraud tactics targeting mobile payments 

As mentioned above, mcommerce is a popular choice for consumers because of its convenience – and mobile payments only make things easier. Worldwide, a staggering 2.8 billion people use digital wallets to make mobile payments. While digital wallets do come with added security benefits, fraudsters find ways to take advantage. In fact, 70 percent of fraudulent transactions happen in the mobile channel. Here’s how.

1. New accounts with stolen details 
   Cybercriminals use stolen credit cards and personal information to open new digital wallet accounts.
2. SIM-swap
   Fraudsters impersonate their victim’s identity to dupe the mobile provider into transferring data from one phone to another. After the SIM-swap, the fraudster has total access to their victims’ digital wallet apps and can authenticate two-factor requests via text.
3. Beating biometric authentication
   A user’s biometrics can be stolen with the help of AI. AI can create deepfakes, face masks, artificial fingerprints, and false voice recognition data. Fraudsters use this spoofed biometric information for authentication into accounts.
4. Social engineering
   Plenty of people fall victim to schemes like phishing attacks, phone scams, and remote device takeovers where fraudsters gain unauthorized access to the user’s account information and payment details.

Mcommerce fraud prevention

To combat fraud, merchants can take preventative measures tailor-made for mcommerce fraud prevention.

Relevant data points

It’s important to prioritize the right data points and move away from less relevant data points that may have been reliable in traditional ecommerce. Indicators that may be valuable in traditional ecommerce fraud reviews can be less revealing in mcommerce fraud reviews. Knowing which revelatory data points are unique to mobile orders to track and analyze can make all the difference. 

Take IP addresses, for example. Given that mobile providers generate dynamic cellular IP addresses from the nearest cell tower for a given device, mobile users tend to switch between IP addresses constantly. With their phone in their pocket, they could be at work, at home, and running errands all within the span of ten hours. A mobile user could have made a purchase from any of these locations – all potentially with different IP addresses – making this common ecommerce fraud red flag irrelevant for mcommerce fraud. A better data point would be tracking the unique identification number that every smartphone carries.

Read between the lines 

Mcommerce users are unique from ecommerce users in many ways. Collect these behavioral attributes like carrier information, GPS location, and advanced behavioral analytics and analyze them. Merchants will then be able to see patterns of behavior and importantly, flag activity that veers outside of the norm to help prevent illegitimate activity.

Device and origin of entry matter

Do they use an Android or iPhone? Did the user switch from a desktop or laptop to a mobile device to complete a purchase? Was the purchase made through a mobile web browser or app? 

Learning the answers to these questions can help merchants efficiently review attempted and successful fraud, pinpoint the origin, and then implement specific security measures to contain and prevent it. 

Proceed on AVS mismatches, but use caution 

There’s a weak correlation between Address Verification Service (AVS) results and mcommerce fraud. Riskified’s data shows that merchants can safely approve 90 percent of mobile orders with a partial AVS match. This is likely because it’s easier for a mobile user to enter errors when typing on a small text keyboard and filling out tiny form fields.

Just as the trend of ecommerce fraud shows us, when a market grows, fraudulent activity does too. Approaching mcommerce fraud uniquely will help you tighten up vulnerabilities that you will only see when you zero in on this channel specifically, so you can keep fraudsters out and legitimate customers in. 

The secret to fraud prevention?

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What is mcommerce and how does it differ from ecommerce?

Mcommerce, or mobile commerce, is the use of mobile devices and apps to purchase products online, including shopping, banking, and bill payments. It functions as a subcategory of ecommerce, where purchases are made specifically through mobile websites and apps rather than desktops.

Why does mcommerce require a different approach to fraud prevention?

Many merchants apply the same fraud prevention tactics used for general ecommerce to their mcommerce channels, which makes mobile a softer target for fraudsters. Indicators that signal fraud in traditional ecommerce, like IP address changes, can be irrelevant in mcommerce due to how mobile networks operate.

What are the most common mcommerce fraud tactics?

The four main tactics targeting mobile payments are creating new accounts with stolen details, SIM-swapping to hijack digital wallets, beating biometric authentication using AI-generated deepfakes, and social engineering schemes like phishing and remote device takeovers.