By 2014, about 12 per cent of all e-commerce transactions will be made using smartphones and other mobile devices, but fraud detection tools for mobile commerce are lagging, Gartner said today.
"Because of the improving browser experiences on smartphones, mobile commerce and transaction execution are set to increase rapidly," William Clark, a Gartner analyst, said in a statement.
"Enterprise applications must detect fraud in these mobile environments, but fraud detection tools available today that work in [wired] computing environments don't work well or at all in the mobile world," Clark said. Tools to detect fraud in the mobile space are in the early stages of development, and he estimated it will take until at least 2012 for them to mature.
Gartner said CIOs need to start researching the fraud tools under development as they consider launching mobile payment systems. Having mobile fraud prevention systems in place will allow companies to remain competitive in e-commerce.
Generally, Gartner outlined three types of fraud prevention methods available now for mobile applications.
The first, called mobile device identification, is provided through JavaScript on a server that a mobile user logs into. The script captures information about a user's browser and phone.
If the application is browser-based, the script application captures unique browser identification information and data to uniquely identify the phone. If the mobile e-commerce application is native on the device, the native application can also gather the phone's serial number and network card number to forward to the e-commerce entity -- but only after the user opts in.
A second way to prevent mobile fraud uses the phone's location information and requires that the device only be turned on. For an enterprise, using location information can help specifically authenticate the user through correlation with other systems such as a user's address in a directory.
Mobile phones can forward location information based on GPS data, but also requires user opt-in. Locations can also be received by mobile network operators employing software tools that don't require user opt-in, Gartner said.
Third, Gartner said some online fraud detection vendors are beginning to customize their risk scoring and rule-based models for mobile applications. Gartner didn't name any of the vendors, but said they are looking at the device itself, its location and the behavior patterns of the user inside a mobile application on a phone. This tactic is still new and a lack of mobile commerce experience to draw upon makes it difficult to build resilient risk models, Gartner said.
Avivah Litan, another analyst at Gartner, said that with the explosive growth in smartphones and the growth of mobile commerce means setting up mobile fraud detection systems is an "imperative" for enterprises.