Against the backdrop of a looming global recession, skyrocketing cost of living and the ongoing supply chain crisis, eCommerce merchants are getting ready for the upcoming peak sale season to maximise profitability and solidify customer loyalty.

On top of managing a spike in volume and ensuring customers have a good shopping experience, Now is the time for eCommerce merchants to build up their confidence and meticulously  prepare for the upcoming holiday season. Riskified’s research found that there are two key market trends that eCommerce leaders need to be aware of to make the most of the holiday season and keep fraud at bay.

  1. The rise and fraud risks of mobile commerce

Of all the shopping channels available to customers, mobile commerce is taking the lead. PayPal’s 2021 eCommerce Index reveals that 4-in-5 Aussies (82%) are shopping on their mobile devices and it is reported that globally, mobile devices generate approximately 63% of internet traffic worldwide. By 2025, retail mCommerce sales should more than double to reach $728.28 billion, accounting for 44.2% of retail eCommerce sales in the US.

However, despite its promise and convenience, mobile commerce can be a frustrating and a poor experience for consumers and businesses alike. Consumers have grown accustomed to new levels of convenience, speed, and ease that desktops and in-store shopping can’t offer. But this also means their threshold for any friction is minimal.

In fact, according to Shopify consumers shopping on smartphones and tablets have the highest average cart abandonment rates at 86% and 81%, respectively. It could be partly due to the fact that consumers have grown accustomed to new levels of convenience, speed, and ease and their threshold for any friction is minimal.

The surge in the volume of purchases during the holiday season, typically results in an overall increase in fraud, which means loss revenue and profits for merchants. On the other hand, how a merchant perceives or measures fraud risk levels based on device sources throughout the year could lead to false declines for many good customers, even though Reducing the amount of legitimate orders that are rejected can have a significant impact on the company’s overall performance. In addition, risky behaviors for mobile throughout the year can turn out to be very safe during the holiday season, such as geographic changes and mismatches between billing and shipping addresses. But conversely, just as a device source’s traffic can grow with legitimate shoppers, it can also gain popularity with fraudsters.

New channels expose new vulnerabilities. A one-hour fulfillment window requires that every piece of the supply chain run smoothly and instantaneously, including fraud review. Merchants who rely heavily on human analysis as part of their fraud prevention measures risk creating a bottleneck that would delay the order and degrade the customer experience. To fully seize the mCommerce moment and capitalise on the millions of daily mobile transactions, it is critical to prioritise initiatives like streamlining navigation, improving website load times, and simplifying checkout processes, while also optimising fraud prevention measures for mCommerce.

  1. Fraud tactics targeting digital wallets

Not offering a preferred payment method can be one of the main reasons behind cart abandonment, negatively impacting conversion rates, average order value, and customer satisfaction. In 2021, merchants were estimated to miss almost $700million in holiday sales due to inefficiencies in digital payment channels.

Over the past couple of years, there has been a significant shift in payment methods with digital wallets quickly becoming one of the most efficient and popular forms of payments primarily because they cater to consumers’ growing desires for quick, convenient, and secure transactions. In 2021, digital wallets accounted for almost half of the world’s eCommerce payment transactions, with their market share forecasted to grow from 49% to 53% by 2025.

Despite digital wallets providing layers of protection that limit technological vulnerabilities, they are not fraud-proof. Digital wallet transactions can still be fraudulent and result in chargebacks. There are four fraud tactics targeting digital wallets:  New accounts with stolen details where fraudsters use stolen credit cards and personal details to open new digital wallet accounts, fraudsters impersonate a victim’s identity and contact the mobile provider to transfer data stored on the victim’s SIM to a new phone, fraudsters using deepfakes, face masks, artificial fingerprints and false voice recognition data to get around biometric authentication and using social engineering schemes like phishing attacks, phone scams and remote device takeovers to hack digital wallets.

Despite the risks, eCommerce merchants should be cautious about systematically approving all transactions associated with a “safe” payment type, as well as blocking all orders that are made using unfamiliar or risky payment methods, as it keeps out potential sales from legitimate customers.

With the ever-evolving changes in consumer behaviors and the current economic conditions, merchants need to stay nimble and prepare for whatever comes this holiday season and beyond. The most reliable and effective fraud prevention solutions are those that have a vast global network of merchant transactions and are able to provide the necessary depth and breadth to identify first-time customers at any time and remove the risk of unknown shopping behaviors. Real-time decisioning capabilities are also imperative to deliver the efficiency, accuracy, and scalability required for typical transaction volumes or peak holiday traffic regardless of the device source or payment type.

Nick Kirtley is country manager for Australia & New Zealand at Riskified.