MasterCard showcased their new Identity Check product at the Mobile World Congress in late February, announcing that after successful trials they will be rolling it out this summer in North America and across much of Europe. Identity Check is an application consumers will be able to download onto their mobile devices, tablets and PCs that will facilitate biometric verification to validate eCommerce and mCommerce transactions. It supports fingerprint reading and/or facial recognition depending on the end user’s device, although most of the publicity has been around the ‘selfie’ authentication feature.
Amazon announced in February they would be acquiring Emvantage, an online payment gateway that processes alternative and card-based payments in India, for an undisclosed sum. The privately held startup offers a platform and technology that Amazon will leverage to develop and build out their Indian eCommerce site and payment platform.
The acquisition of Emvantage benefits Amazon by providing local payment methods and expertise in a market that has lower credit and debit card penetration and more preference towards cash-funded and alternative payment methods.
Apple CEO Tim Cook may not have had the year he was hoping for after saying that 2015 would be the year of Apple Pay, but it was a strong year for mobile contactless payments overall marked by increases in adoption and mobile payment volume, several more players entering the arena and multiple partnerships, acquisitions and commercial developments to foster the future of mobile payments. While it’s estimated that only 16.6 percent of U.S. consumers with a compatible iPhone have tried Apple Pay and this payment method is used in just 5.1 percent of transactions where it is supported by both parties, it was a catalyst for mobile contactless payments which doubled in volume for 2015 and are expected to triple in 2016.
According to eMarketer there were over 23 million proximity mobile payment users in 2015 that spent $8.71 billion, more than doubling from $3.7 billion spent via contactless POS mobile payment methods in 2014.
Benchmark data of top global retailers from ACI Worldwide along with data tracked by the eBay Enterprise Holiday Fraud Index show apparent strategies and key dates where types of fraud attacks spiked during the holiday season, while overall fraud attempts between Thanksgiving and New Year’s Eve increased by 8 percent compared to 2014.
Merchants with any experience selling goods or services online are aware that eCommerce fraud tends to increase during the holiday season when overall transaction volume is higher as well. Data from eBay and ACI Worldwide show high fraud attempt rates on dates such as Thanksgiving, Christmas Eve and New Year’s Eve.
While the number of data breaches that occurred in 2015 stayed nearly the same as from the year before, the number of personal records compromised in data breaches almost doubled to over 169 million, the highest total since 2009. Some of the largest breaches in 2015 were in the health care industry which often included social security numbers and enough information to commit new account fraud. There were over 5 million records compromised in breaches targeting the banking and financial industry, and hackers continued to target merchants and other organizations for email or user ID and password combinations.
The number of data breaches reported by the Identity Theft Resource Center (ITRC) increased each year from 2011 to 2014, before staying flat in 2015 at 781, just about the same number of data breaches as last year (783). The number of sensitive records compromised, however, which can include Social Security numbers, payment card numbers, email/user name/password combinations or Protected Health Information (PHI), nearly doubled from 85.6 million to 169.1 million.
In mid-January IBM announced the acquisition of IRIS Analytics, a data modeling and analytics provider based in Germany that focuses on risk management for issuers and payment providers. This is IBM’s second acquisition in risk management for the financial services industry following their 2013 purchase of Trusteer.
IRIS Analytics was founded in 2007 and provides a data modeling and analytics platform with real-time risk scoring to support payment card and mobile payments. The acquisition will bolster IBMs fraud prevention and eCommerce services, complimenting their IBM Security Trusteer Advanced fraud protection solutions.
Consumers made more than $2 billion worth of purchases in the mobile eCommerce channel between Thanksgiving, Black Friday and Cyber Monday. Adobe reports that mobile devices accounted for nearly half of online shopping visits while comScore estimates that mobile eCommerce spending increased 53 percent from last year on Cyber Monday.
If the consumer shopping trends observed from Thanksgiving through Cyber Monday continue, merchants can expect to generate a lot of revenue in the mobile channel this holiday season. According to estimates from Adobe’s Digital Index, mobile shopping visits exceeded desktop site visits on Thanksgiving Day. Consumers continued to favor mobile devices more this year on Black Friday and Cyber Monday as well.
eCommerce Retail Spending Thanksgiving through Cyber Monday Grew 10 Percent While Brick-and-Mortar has Another Year of Decline
According to estimates from comScore, U.S. consumers spent over $7.2 billion online from PCs during the five day period from Thanksgiving to Cyber Monday, up 10 percent from $6.5 billion last year. As more consumers chose to shop online retail sales at the point-of-sale declined on Thanksgiving and Black Friday for the second consecutive year. According to estimates from ShopperTrack, brick-and-mortar sales totaled $1.8 billion on Thanksgiving and $10.4 billion on Black Friday, each down about 10 percent from 2014.
Meanwhile desktop eCommerce retail spending on Black Friday grew nearly 10 percent this year to $1.66 billion up from $1.51 billion in 2014, according to comScore data. Although ShopperTrak reports that brick-and-mortar retail volume fell 10 percent on Black Friday, it still totaled $11.6 billion for the day, which is about 7 times the desktop eCommerce spending. While the bulk of Black Friday sales still occur at physical retail stores the share of total Black Friday sales occurring online continues to grow as online spending trends upward and in-store spending hits another year of decline. Nearly 16 percent of Black Friday sales occurred online this year, compared to 14 percent last year, 11 percent in 2013 and below 9 percent every year prior.
After completing a $67 million settlement with Visa in August regarding the high profile data breach Target experienced in late 2013, the company this week announced acceptance of a $39.4 million dollar settlement with MasterCard and issuing banks. Home Depot, who suffered a notable data breach in 2014, also reached a settlement with MasterCard according to court filings. Each retailer has incurred more than one-quarter billion dollars in expenses related to their respective data breaches.
While MasterCard tentatively approved a $19 million settlement back in April regarding the Target data, several issuing banks rejected the offer. In early December the parties reached an agreement that has Target compensating card issuers as much as $20.25 million with another $19.11 million going to MasterCard.
Visa recently released data and figures regarding EMV usage in the first full month of purchases following the October 1st EMV liability shift, adding that they are “extremely encouraged” with the 42 percent increase in chip-on-chip transaction volume and the 49 percent increase in merchant locations that can accept EMV in just one month’s time. The real test for EMV, however, will be whether its use continues to increase during the peak times of the holiday season when stores are busy and merchants want to keep lines moving.
In late November Visa announced several promising facts and figures regarding the growth in use and acceptance of EMV cards in the United States. The card association reported that there are now 180.6 million Visa EMV cards in the U.S., 57 percent of which are credit cards. This represents about 25 percent of the 720 million Visa payment cards in circulation in the United States, up from 18 percent in July.