Podcast: Protecting restaurant mobile apps & mobile ordering from fraud

Today's podcast is sponsored by...

Kount is an ecommerce fraud prevention solution. The enterprise solution uses advanced machine learning technologies combined with customized policy rules and dozens of other features to prevent fraud for online businesses.Kount customers experience as much as 98% fewer chargebacks, lower fraud losses than ever before, and minimizes the need for manual review of orders. Get back to business and let Kount fight fraud for you. Learn more at www.kount.com.


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Intro & News

Welcome to episode eight of the Mobile Payments Today podcast. I am your host, Will Hernandez.

For the news this week, there was one thing that really stood out to me and that is the news that AliPay and WeChat will no longer let users buy crypto currencies on their respective platforms. That comes as a result of the Chinese government increasing its ban on crypto related activities. WeChat, laid out a more detailed plan about what they're able to do going forward and that will be to prohibit the use of payment for virtual currency transactions through their platform and they're also instituting real time monitoring of daily transactions to make sure that nobody indeed is getting involved in any kind of crypto currency type of activities. AliPay said it will also take some measures to restrict permanently ban accounts in any kind of crypto currency activity. 

China just has this weird history with Bitcoin and it's a fascinating one because the government there is doing everything they can to discourage people from getting involved with Bitcoin. But the other part of that is that block chain, anything blockchain related seems to be okay. And the reason I mentioned that is because Ant Financial, which owns AliPay, is working with Chinese farmers on a blockchain mechanism that Coindesk described as a rice tracking application intended to tackle counterfeit products. So apparently there are fake rice products in China and if that doesn't blow your mind a little bit, I don't know what does. I think the thing here though to keep in mind is that in some ways it seems as though blockchain, as long as that can benefit the government or private company somehow in China.

If you want to hold it as an asset like so many people do, then it's basically no Bitcoin for you and I hope that somebody who is listening to this will want to come onto the podcast and talk about this more in depth because I think it's a very fascinating situation that's happening in China right now. As far as our guests this week, Don Bush from Kount is back to finish our three part series that focuses on fraud and today we'll be talking about the fraud and mobile apps and mobile ordering. Judy Mottl is back this week. I'll chat with the editor of Retail Customer Experience about some interesting stats that came out of Amazon Prime Day that are related to mobile, so stick around and 
right back after this quick break.


Q&A - Don Bush, VP of Marketing, Kount

Will: I am here with my guest this week for the final installment of this series. Don Bush is the VP of Marketing for Kount.

Don, thanks for joining us this week. How's everything going? 

Don: Doing good. Thanks. Will, I appreciate being back. 

Will: So before we dive into the topic at hand, I kind of wanted to set up the scene a bit for our listeners in regards to the idea of the subject of mobile ordering. Particularly when it comes to the restaurant business and this is an area that we've seen explored in the past couple of years. It's become a must have feature for consumers. What do you think mobile ordering in particular has struck a nerve with consumers here in 2018? 

Don: I think there's a couple of things coming into play here. One is the digitalization, if you will, of the experience of purchasing things. We've had buy online pickup in store for a few years now. It's gone reasonably well. It extends the reach of a retailer so that they can look at that and say, "Gosh, they don't have to walk into my store". So they can, want to, have shipping or wait. It makes it very convenient when I'm talking about the restaurant industry, whether it's what they call Fast Casual, like a Panera or a quick service like a Wendy's or a Dunkin or even a table service like an Applebee's or something like that. They're all saying, how can we get in front of the consumer more often and so it's starting to happen as you're seeing these apps and now I can order from Applebee's, pick it up on my way home and I didn't have to wait in line. 

They've got special parking spots in the parking lot to bring my food out. To me, it makes it quick and easy. I've got the menu right here. I've got a payment method on my app and it makes it extremely easy for the consumer. It's a good customer experience and if I can get them doing that and make the experience good, I'm probably going to pick up more business and you start seeing things like the millennial generation. I can't remember the exact number, but it's something like 57 percent of those folks have at least three food service type apps on their phone. So they're buying 60 percent more than say the baby boom generation in this fashion. So it really is becoming one of those, if I want to extend my brand, if I want to extend the reach to my consumer, if I want to have a good customer experience, I can do this and it's all mobile order ahead or an app or something of that fashion. 

Will: As we transition this conversation into the fraud aspect of everything, and in general it seems that QSRs and Fast Casuals have been more susceptible to fraud in recent years. Why do you think that's been the case? And do you think now those entities are dealing with fraud better than they were maybe, let's say just a couple of years ago? 

Don: Oh, absolutely. It's the natural progression of a company that has been basically a cash business. You know, you walk into a Wendy's, you give them a credit card or cash, they run it through their POS machine. It's paid for, it's done, there's no collections. And so when they digitize their business, one of the first things a company start to understand is, hey, if they're not standing in front of me with a credit card, they may not be who they say they are. And so this aspect of fraud is kind of a new idea. They never got a charge back when they were walking into the store and somebody presented a credit card. They aren't going to charge back because the liability was all on the bank.Now, they go to this online or mobile experience, that liability shifts back to the merchant. 

So if there's any fraud there, the merchant is liable for that. And so I think a lot of them, first out of the shoot went, hold on, what is this thing you're calling a charge back? It's, I've never seen one of those before. And I think the fraudsters were very aware of maybe that a naitivity. They were quite a target and they remain a target today because they're still going through a large portion of their digital transformation into buying online, buying through an app, buying on a mobile browser and things like that. I think there are definitely getting better without a doubt. They're learning what they didn't know and making the most out of it to protect themselves and their customers 

Will: As far as mobile ordering is concerned, when something new becomes popular, criminals tend to find inevitable ways to find the way to exploit it. Just based off of the Kount's recent Mobile Payments and Fraud Report, the ability to detect fraudulent mobile orders as a high priority for merchants, whether it's restaurant, retail, whatever. 52 percent of merchants cite that as a high priority. What exactly does that fraud look like for restaurants in terms of mobile ordering? What have you seen happening? 

Don: Well, it's a different experience. The legacy online purchasing was with a laptop or a desktop and I had a static IP address. Lots of things from that device. Machines are different when you're on a mobile device, a static ip address, because it's a phone. I may be at a car, I may be on main street and five minutes later I'm on state street. That doesn't mean I'm a fraud. It means I'm on a mobile device, so that has a different behavior, different signals that a restaurant or retailers can look at and understand what's really happening. So it's quite a bit different when you start looking at a mobile fraudster or tactics that a mobile app would experience than somebody on a desktop. So what retailers and restaurants need to understand is the difference between those and how to determine what's good and what's bad in each one of those environments and what that mobile payments and fraud survey that you mentioned talks about is that merchants are behind about 50 plus percent. These merchants can detect whether it's a mobile device or not, and a certain segment of those that can can't tell you what type of device it is. Is it a game player or is it a tablet or considered mobile devices? They all have their own behavior patterns and signals, so it's really important to be able to determine what type of a device is transacting with you. 

Will: I would imagine that's going to get more difficult. Because now they're coming out with a smart speaker and obviously Apple has got into the market and we have an Echo and Google Home. How much more difficult does that make it to know that there are just millions of devices out there and you don't really know what's coming from what right now? 

Don: Well, it is difficult because doing an audit on yourself, how many devices in your home do you have the connect to the internet? I audited my home. There are 22 devices in my home. I'm by far not the most technical savvy, but I've got three laptops. We've got five phones, we've got two smart televisions. We add game players, you start adding those up and those are all devices that I could make a purchase with and so merchants have got to be able to determine them. I could my family's vacation using my Xbox if I wanted to. I'm probably not going to, but I could do it now. It probably would be out of the ordinary for me to do that now. It wouldn't be out of the ordinary for me to order a new Xbox game, you know, a Fortnite upgrade. But it would be out of the ordinary for me to do things like I said, plan my company vacation or my family vacation. 

So the type of device also gives you ideas of the type of buyer and the types of patterns and the behaviors. And so you're right, it's only gonna get more difficult. I think the last study I saw said there were about 14 billion mobile devices in the world. Well, when you think about there's only about three and a half billion that are regularly connected to the internet, that means each of us have somewhere between three and five devices.

Will: To finish off, a two part question here. I'll ask the first one. What should they be doing to stay ahead of this right now? For those with mobile ordering, what should they be looking out for right now? 

Don: The first thing they need to do is understand the difference between what is a secure app and what is an app that has developed to minimize fraud. A secure app has nothing to do with fraud. It just means it passes the security to go on the Apple or Android platforms. It's not something that can be easily hacked. So there's a difference between security in an IT sense and fraud. I think sometimes folks that are maybe new to this whole payments and fraud thing confuse that. So that would be the first thing I'd want them to look at. The second thing is when they're preparing mobile experiences for their customer, is it an app? Is it a browser? What is it? You're with your payments and your fraud team and say, what is it that we should plan for? Are there things we can do in this to alleviate, uh, difficulties that you'll have during that transaction phase? 

And there's lots that can be done. The way people order, when the order page is presented, what types of payments are taken, what operational or logistical methods are we going to employ? And just having that conversation, that collaboration between teams can save a lot of heartache down the road. 

Will: Looking into getting into mobile ordering. And maybe when they're listening to this, they might be thinking, oh, maybe this is not such a good idea, but I mean this is a feature that is getting more popular. What should those restaurants keep in mind going forward? Right now? 

Don: I think it can be done and it can be done very, very well. Those that have done it well, they've got extremely popular brands and apps. They've gained market share by doing it and that's of course what everybody's goal is. They want a bigger share of the wallet, so to speak of the consumer. Just to go in with eyes wide open, plan for stuff that's unexpected that you haven't had to deal with before. If you're going from an all cash business with card present transactions and you're moving into card not present, talk to your payment service provider to if they've got some tools and processes that are helpful. Talk to people like Kount. We can provide consultation services to say, hey, these are the things you want to watch out for. Get your IT and your development group with your payments and fraud teams. Have them work together because the more they work together, the fewer surprises down the road and the more secure you're going to make your process. And then of course your brand is going to flourish with having a lot of happy customers. 

Will: As always, thanks for joining us and thanks again to Kount for sponsoring the series. I'm glad we got a Fornite reference in the episode. That's pretty cool. So thank you for that. We've received some great feedback from the series as a whole and I'm sure that you and I will be chatting somewhere down the road. So thanks again for joining us. 

Don: You Bet. And by the way, Fornite is protected by Kount. So I'll leave you with that. 

Will: Oh really? That's a great little nugget right there, thanks.

Topics: Mobile Payments, Online / Mobile / Social, Online Services, Systems / Technology

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