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M-commerce and fraud – beware the pitfalls


The good news is that the ecommerce market will grow 4.5 percent annually as mobile and social media drive the value of total online retail sales to £195.3 million over the next four years. The bad news, however, is that an increase in ecommerce fraud of £30 million is also expected, as new channels create more opportunities for fraudsters.


According to a report conducted by the Centre for Economic and Business Research (Cebr), on behalf of PayPoint.net, the number of internet users purchasing products via their mobile phones will rise by 5 million, to 10.5 million, by 2015. Social media is also expected to be a significant growth area, with an additional 2.9 million users making purchases through these channels by 2015.


In light of this, “The Rise of New Ecommerce Channels: Shoppers’ Delight or Gangsters’ Paradise?” report, forecasts the impact of ecommerce fraud on the UK economy is likely to rise by 18 percent, from £165.2 million in 2011 to £195.3 million in 2015. This, states the report, is largely due to new payment channels being more vulnerable to fraudulent activity during the years of early adoption, as it takes time to discover and resolve underlying security issues.


Since its peak in 2008, the economic impact of ecommerce fraud has declined, falling by 16 percent in 2009 and a further 4 percent in 2010 as businesses adopted more secure payment mechanisms and fraud screening detection tools, such as Verified by Visa and Mastercard SecureCode. However, the introduction of new online shopping channels will reverse this trend, according to PayPoint. net’s report, and shopping through social media sites, mobile browsers and apps is expected to be the biggest contributor to the losses, costing £24 million by 2015.


These channels are relatively new, which means that there is less history available to monitor the potential fraud risk associated with a transaction. In addition, consumers using them provide less personal data than through traditional ecommerce sites, so the retailer has fewer criteria to check against. This means that each transaction has a smaller footprint and e-retailers will need to be more vigilant of the customer information they have access to. Monitoring fraud in real-time, against a detailed set of criteria using as many tools as possible, will help to identify a dubious payment.


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Each of these can boast about some high profile “early adopters”. Which one might work best for you is, as always, a matter of your requirements, the vendor’s experience and flexibility, time required for implementation, system cost, and how easy it is for the vendor to integrate with your current ecommerce platform.


Of course, many ecommerce platforms are themselves now offering m-commerce options. These include: • ATG Commerce (Oracle) • BigCommerce • Demandware • iCongo • Magento (open source) • MarketLive • NetSuite (Gproxy) • ProductCart (Early Impact) • ShopVisible • Venda • Volusion


And this list, like the one for independent platforms, is constantly growing and contains more vendors than this one article could discuss. Not to be overlooked are the direct


commerce order management and fulfilment solutions that now also offer m-commerce as well as ecommerce modules. Most UK systems already do, and those that haven’t released one yet are probably working on it. A good example of how UK merchants


are approaching m-commerce is Republic, a multibrand fashion retailer which has launched a mobile-optimised website that creates a rich shopping experience for consumers at home, on the go, or in a Republic store. The mobile site runs on the Venda Mobile Platform, powered by Digby, which gives Republic a strategic mobile channel that complements its ecommerce site and supports more than 110 retail stores across the UK. Republic’s mobile shopping experience allows customers to search, browse and buy products in as little as 60 seconds when they visit the company’s website from iPhone, BlackBerry and Android mobile devices.


What are your options? Which way should you go? As with any systems project, keeping it simple is the best course. If you already have a direct commerce order management system and your vendor offers m-commerce functionality, start there. If you have a separate ecommerce provider with mobile configurability, that’s probably the way to go. The companies most likely to use


standalone m-commerce solutions are those that are either currently retailers without a lot of direct commerce experience, or very large enterprises that have a multitude of platforms and solutions, and prefer to select presumably “best of breed” (or at least specialised) solutions whenever appropriate.


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Functionality In judging how well an m-commerce solution works, you should look for some of the following capabilities, all of which are able to optimise the very small real estate available on even the largest smartphones—note that the iPad and other tablets actually require their own separate solutions since the interface is much larger. Although the best m-commerce platforms have a separate version to support these, they become another differentiating factor in your system selection: • Top-level product category listings, plus a hierarchy of products within categories to make searching easier


• Product pages that include photos, product detail and specifications, prices, discounts, cross-sell displays and customer reviews, with the option to let customers add reviews or comments of their own


• Wish list management • Adding a product to a favourites list • Real-time stock quantity updates • Support for promotional offer codes • Shop location look-up • Support for mobile alerts • Strong website search • Support for multiple payment methods, including PayPal.


Nice-to-haves include: • One-click purchases for previous customers • Cross-sell suggestions • Secure access to a customer’s own order history


• Support for videos • Gift list management • Ability to text product details on request • Direct link to a customer service rep on the mobile phone


• Leave feedback for the seller


Speaking of mobile payments, the following vendors have gotten into the act: • BillMeLater • PayPal • AMEX Serve • Zong (recently purchased by eBay) • Boku • Mophie (Intuit) This list doesn’t include systems like Square, which enables mobile phones to be used to swipe credit cards for in-person, encrypted transactions.


Three leading UK mobile telecoms companies, Everything Everywhere, O2 and Vodafone, have announced they will embark on an m-commerce joint venture that will help drive the adoption of Near Field Communications (see above). The agreement will provide a single point of contact for advertisers, marketing partners, retailers and banks looking to create m-commerce products and services.


Mobile analytics Not surprisingly, there is an entire subset of analytical solutions for mobile commerce.


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