EMV technology has transformed the payments industry by making it more difficult for fraudsters to commit crime. With the newly enabled chip cards, fraudsters are not easily able to access cardholder information and create counterfeit cards. However, many merchants have yet to enable the EMV software on their upgraded EMV terminals and are encouraging consumers to swipe instead of dip their cards. Likewise, many consumers would also prefer to bypass EMV for convenience and speed.
A recent survey conducted by Trustev took a further look at payments prior to EMV, the current issues due to EMV, and how online fraud will become an increased threat.
Let’s take a further look at what was revealed:
Most Used Payment Methods
The survey discovered the following details on the forms of payment participants most commonly used:
- 1.1 percent of those surveyed used mobile payments the most to make purchases.
- 29 percent of those surveyed used credit cards the most to make purchases.
- 61 percent of those surveyed used debit cards the most to make purchases.
Payments Prior to EMV
Before the liability shift occurred, all debit/credit card transactions were swiped at the terminal. Unfortunately, this method has never been very secure and made it easy for fraudsters to steal cardholder information.
TransUnion’s VP of Identity Solutions, Rurik Bradbury, commented about this lack of security by saying, “You sign for something and they barely check the signature and it could be anything. You could write, ‘Mickey Mouse,’ in many cases and you would just walk out with the goods.”
Issues With EMV
Bradbury notes that EMV, on the other hand, is much more efficient at protecting against instances of card-present fraud. However, even though EMV comes with heightened security, many have had struggles with EMV adaption. Consumers have voiced their disapproval that EMV transactions take longer to process and hold up checkout lines more. Because of this, some merchants are purposely disabling their upgraded EMV terminals and are instructing consumers to swipe their card instead of dipping it in the designated EMV slot. Producing new chip cards has also shown to be an expensive process for card companies as well.
Companies who utilize recurring payments for their customers have also seen a disruption in payments. Since many consumers’ cards are being replaced with new chip cards, companies who have automatic payments scheduled have experienced a delay in payments until they are able to obtain the new card information.
Online Fraud Spike
With EMV now increasing card-present security, fraudsters are instead targeting online fraud instead. Bradbury refers to this change in tactic as the “ripple effect” due to EMV and that online fraud will significantly increase because of the new chip cards. In fact, several other countries that implemented EMV technology years ago experienced the same ripple effect.
“That’s the seismic aftershock effect of that October (2015) rule change. The same happened in countries preceding the U.S. with EMV. With the EMV adoption, what has happened in other countries – Australia, Canada, the U.K. – there has been a big rise in online fraud. By making it more difficult to commit fraud in-store with EMV, the shift to online has accelerated,” said Bradbury.
Although EMV has taken a bit getting used to, EMV technology will certainly help increase card-present security and protect merchants and consumers from experiencing a breach. With online fraud now becoming a more prominent issue, payments experts need provide solutions that prevent fraudsters from committing crime online.
Looking to upgrade your equipment to accept EMV technology or offer secure online payments? Contact First American and get started with EMV today!