Along with the widespread of e-commerce, m-commerce or trading on mobile is gaining prominence in the years ahead. Here are some mind-blowing figures about M-Commerce. Based on the Goldman Sachs report, worldwide consumers making purchases via mobile increases to $626 billion in 2018 from $204 billion in 2014. According to this report and the projected world population of United Nations, about 14.4% of the 7.56 billion people on earth will proceed at least one purchase on mobile by 2018. In another statistics of leading global e-retailers in 2014 ranked by mobile commerce sales, Amazon.com generated $16.8 billion in mobile commerce revenues, representing a 110 percent year-on-year growth, following by Apple with $14 billion and Jingdong Mall with $5.8 billion. However, this massive increase in the use of m-commerce has led to an increasing threat of security. Users access mobile devices with certain limitation to avoid information theft or hacker, especially when it comes to mobile banking, which highly requires both security and convenience during the transaction.
According to the 2014 LexisNexis True Cost of Fraud Study, m-commerce fraud loss as a percent of revenue grew significantly in 2014, reached 1.36% from 0.8% in 2013 (see below chart). On a similar line, merchants are also experiencing increasing fraud costs this year at $334 every $100 of fraud from mobile payments.
Fraud loss as percent of revenue (2013 – 2014) by LexisNexis
Although complex password and PIN are offering a relatively sufficient level of security, they add inconveniences and cannot put the security to the highest. Moreover, according to the Internet Retailing magazine, 50% of online retailers said it is difficult to keep up with fraud methods and trends. In such cases, the identification of a person, based on physiological or behavioral characteristics, such as fingerprint, iris, vein, hand geometry or voice, appears as an emerging solution that could provide both the highest convenience and highest security.
How biometrics would change the way of fraud prevention:
- Reduce fraud loss: biometric technology provides fast & accurate identification process, hence, detecting fraudulent on their first attempt.
- Increase the revenue of online transactions: with the security and convenience that biometric authentication system provides, customers will enjoy fraud-free online transactions which resulted to a rapid upturn in the number of transactions and the revenue annually.
- Follow easily: with a simple mobile device integrated biometric scanner & software, both customers and retailers can easily register & start to purchase. The process will be a lot simpler for the 2nd buying time.
- Reduce fraud cost: with its advantages of convenience, security and fraud prevention effectiveness, biometric recognition is a long-term cost effective strategy with the potential to save billions of dollars per year of fraud costs.
Recently, many companies have offered biometric mobile payments such as: Apple – ApplePay & Apple TouchID in 2014, Paypal – Paypal app integrated with Gear 2 watch, Alibaba – Alipay & Alipay Wallet, etc. One of the latest applications is SayPay technologies, a voice biometric payment solution launched by an U.S. company. Users can authorize e-commerce purchases, P2P (person-to-person, peer-to-peer), bill pay, etc. by speaking unique one-time crypto-token generated at run-time into the mobile app, according to the developer.
In the next decade, biometrics M-Commerce is expected to reach mainstream adoption. As reported by Accenture survey, 71% of in-store shoppers are interested in paying by mobile phone but only 9% of retailers have mobile wallet capabilities. In another note, the coffee titan, Starbucks, reports that 15% of its in-store transactions in the U.S. are mobile payments even though users have to access and log in to its payment app. Apparently, the demand is there and is on a significant rise. According to the latest report from Acuity Market Intelligence published in 2015, biometric mobile payments hit $33 billion in January 2015 and revenues generated by biometric mobile payments is forcasted to reach $33.3 billion by 2020. Biometric mobile trading with its security and convenience will not only enhance the customer experience but also push up m-commerce market.