Sarasota, FL, May 13, 2015 / By: Justin McDonald, The Fraud Practice LLC
More and more consumers, as well as fraudsters, are browsing, buying and banking via their mobile devices. While this has benefitted consumers with increased convenience it has also created new challenges for merchants, financial institutions and others that want to reach customers in the mobile channel, as they now must also manage new risks. The mobile channel continues to grow overall and as a portion of total commerce, but is also heavily targeted by fraudsters. According to a study by LexisNexis and Javelin Strategy and Research, mobile payments represented 14 percent of all transactions in 2014 but accounted for 21 percent of all fraudulent transactions, and 1.36 percent of mobile revenues were lost to fraud.
Many organizations that expanded sales to the mobile channel learned the hard way that their risk management strategy, which may have been effective for traditional eCommerce, was not as effective for managing risk or maintaining an optimal user experience with mobile eCommerce. Organizations had to optimize their websites and payment processes to fit the mobile channel, and risk management is no different.
The good news for organizations is that while advancements in connectivity and mobile device technology have led to a rapidly growing mobile commerce market, these advancements have also improved the use of many risk management tools and solutions that are able to make use of this technology as well. One such example, and the focus of this article, is identity document verification, which has evolved from a more burdensome process of scanning or faxing in copies of passports and IDs to a streamlined process focused on a positive user experience by leveraging the modern mobile device. Here we discuss how this risk management technique can be best utilized within the mobile channel and how mobile technology has made identity document verification a more viable option for merchants and other organizations beyond financial institutions.
Autofill Forms with Information from Identity Documents
Mobile devices have small screens and touchscreen keyboards meaning the steps where consumers must enter in their personal and payment information are more tedious and more prone to error. This makes the option for saved billing and shipping information all the more convenient for mobile transactions, but organizations that store this information must also take the necessary measures to protect it, and first time customers or those checking out as guests are typically required to provide this information manually. This is a significant source of abandonment in the mobile channel, the Skava Consumer Mobile Shopping Survey found that 88 percent who shop on smartphones have had negative experiences with 51 percent stating websites were harder to use from mobile devices and 26 percent citing issues with the checkout process.
Difficulty completing an online transaction from a mobile device may be apparent for many organizations when comparing abandonment rates between channels. Web analytics service Formisimo reports that 13.5 percent of online shoppers who add items to a cart complete the purchase from a desktop, compared to 8.5 percent of online shoppers coming from a mobile phone. Consumers often choose to transact in the mobile channel for convenience, and identity document verification can reduce friction in what is typically the least convenient step: providing identity and/or payment information at the account creation or purchase events.
Using text recognition technology identity document verification services can offer the ability to extract the information from the front of a payment card, driver’s license, passport or billing statement and then use this information to fill out the name, address and other data fields that the organization needs to collect. From a consumer’s perspective this makes onboarding or checkout much easier and can lead to reduced abandonment. When you consider that Apple has consumers take pictures of their payment cards to add them for use with Apple Pay, it is likely that most consumers will be familiar and comfortable with this process in the near future, if they aren’t familiar with it already.