3 ways EMV chip credit cards are impacting fraud
It’s still too early to tell whether EMV adoption in the U.S. is having the desired effect of reducing counterfeit card present payment fraud. Consumer use of EMV chip credit cards is increasing– more than 80 percent of general-purpose credit cards in the U.S. will contain a chip by the end of 2016, according to Mercator Advisory Group –but delays in certification and activation of the terminals have slowed merchant adoption. A June 2016 survey by the National Retail Federation reported that 57 percent of non-EMV-enabled retailers had already installed EMV-capable hardware, but were still waiting for certification.
While merchants face some obstacles in EMV adoption, consumers are getting smarter about protecting their information, and fraudsters aren’t wasting time. Being aware of how chip cards are impacting fraud can help your financial institution implement the solutions and best practices that protect your cardholders and meet their expectations for a secure banking experience.
1. Consumers are more aware of fraud.
High profile data breaches first drew consumers’ attention to the threat of fraud, but EMV chip card issuance brought it home. According to the Gallup 2015 Crime Survey, card fraud and identity theft are the types of crime consumers are most concerned about. Educating consumers about the increased security features of EMV chip cards has brought greater awareness of the threat of card fraud. Issuing EMV chip cards provides an opportunity for your institution to reiterate its commitment to securing payment transactions for your customers.
2. There’s a sense of shared responsibility.
A consumer survey conducted by Vantiv and Socratic Technologies revealed that 72 percent of consumers and 70 percent of card companies feel that they are equally responsible for protecting themselves against credit and debit card fraud. Card controls and other security monitoring practices give financial institutions a means to share this responsibility with their cardholders. Account monitoring tools like MobiMoney from Vantiv put cardholders in control of their cards and help ease the burden of fraud protection for financial institutions, merchants, and consumers alike.
3. Other types of fraud are increasing.
Fraudsters road blocked by EMV are finding other ways to get their job done. During the first half of 2016, more than half a billion data records were compromised in 974 publicly disclosed breaches worldwide. Since EMV only protects against counterfeit card present transactions, fraudsters are increasing going online and targeting card-not-present opportunities.Additionally, account takeover and identity theft are becoming more common. Thieves are going after unprotected personally identifiable information, targeting healthcare and government organizations in particular.
Automatic Fuel Dispensers (AFD) have the potential for being a target for fraudsters. In addition to being difficult and costly to upgrade, AFD operators have more time to prepare to accept EMV chip card payments in order to avoid counterfeit fraud liability.
Another area of concern is non-received issue (NRI) fraud, in which delivery of a consumer’s card is stolen or intercepted. However, financial institutions typically have practices and precautions in place to prevent this type of fraudulent activity.
No doubt, the EMV migration will have a permanent impact on card payments and financial institution offerings. Being aware of this technology’s impacts on fraud and across the consumer experience can put your institution in a competitive position to meet cardholder expectations now and into the future.