Is EMV working?
by John Winstel
Much has been written about the transition to the Europay, Mastercard, and Visa (EMV) chip card standard in the U.S. Its been over two years since the October 2015 fraud liability shift, which transitioned financial liability for certain types of fraudulent activity on EMV chip-enhanced cards from issuers to merchants.
Since then, merchant adoption has picked up. According to a recent survey by the National Retailer Federation, 81 percent of small brick-and-mortar merchants expect to install chip card readers by the end of 2017. For mid- and large-size retailers, that figure is projected to reach 99 percent.
EMV represents a significant advance in fraud mitigation over the traditional magnetic stripe. Following the liability shift, counterfeit fraud claims have declined for five straight quarters, and are down by 34 percent since their peak in early 2016.
Yet concerns with the technology remain. Merchants have expressed frustration that the EMV regulation stopped short of requiring chip and PIN technology, in favor of chip and signature, a less secure solution. It is believed this decision helped lead to a 25 percent increase in lost-and-stolen fraud claims since the liability shift, costing issuers an average of $50 million in additional fraud charges annually.
And as e-commerce activity grows, and fraudsters seek avenues of less resistance, card not present (CNP) losses are projected to more double from $3.1 billion in 2015 to $6.4 billion in 2018.
EMV is not the be-all, end-all in combatting fraud. However, it is a major step forward and allows the U.S. to compete on the same ballfield with the rest of the developed world. When issuers, cardholders, and merchants work together to implement proven fraud mitigation practices, such as real-time mobile fraud alerts, customizable card controls, and biometric authentication practices, the true capabilities of this improved technology will become apparent.