Retailers using the mobile channel to conduct business are experiencing loss due to inadequate security.
This is according to a cyber security study, "Mobile E-Commerce, friend or foe", sponsored by RSA, the security division of EMC, and TeleSign, a mobile identity company. The survey, conducted by J Gold Associates in 2014 and released last month, looks at the growth of mobile commerce and the accompanying fraud issues.
The results were gathered through an online survey of 250 e-commerce organisations with an average annual revenue of $2.54 billion.
The study notes it is imperative e-commerce organisations using mobile channels invest in technologies that limit or eliminate mobile-induced fraud if the company is to thrive in a competitive marketplace.
According to the report, fraud in mobile commerce is costing retailers in North America up to $240 million in losses a year. Much of the loss is due to data theft and breaches in security.
The study revealed mobile interactions are set to increase dramatically and generate substantial revenues. However, there is also significant potential for increased fraudulent activity from mobile devices, as they may be harder to protect and secure than traditional PC devices, it adds.
Just 8% of the respondents said they had no mobile-related fraud in the past year, while 34% said they had lost as much as 5% of revenue, 14% said 10%, and 15% said they lost as much as 25% of revenue.
In the next two to three years, the number of retailers using mobile devices and apps to sell their goods will surpass doing so online, says TeleSign. This represents a green field for fraud incidents if security postures remain the same, it adds.
As a result, mobile commerce companies not properly securing their mobile transactions face significant risk of fraud incidents destroying their business, adds TeleSign.
According to Steve Jillings, CEO of TeleSign, mobile commerce companies that have not invested in enhanced mobile security will have sharply reduced revenue.
Companies will have much higher operational costs and a customer base that may be exposed to fraudulent activities, which will move to other, secure sites should they become victims of fraud or even feel vulnerable to it, says Jillings.
In addition, businesses that expose themselves to mobile fraud also experience significant revenue losses, he adds.
"Clearly mobile security is a long-term challenge that needs continuous intervention. It must be on every organisation's high priority list for the next year or two as the need to get a handle on this challenge will only grow with increased reliance on mobile e-commerce."
The report reveals there will be a significant shift in required mobile login credentials over the next two to three years, to more sophisticated security solutions.
The next-generation authentication technologies such as biometrics, soft tokens and other two-factor authentication will largely replace the user name and password as the primary method of authentication, says the report.
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