EMV: How is the roll out going? What has happened since last October?
One year ago, the deadline for complying with EMV (Europay, MasterCard and Visa) hit the U.S. Many banks and retailers have started using the system. Long used in Europe and other regions, this system uses credit cards with an embedded chip, requiring new POS (point-of-sale) readers on the merchant side. The chip makes cards more difficult to counterfeit for in-person use.
This system, though expensive to implement for both merchants and banks, is making POS transactions much more secure, but historically has shown a shift of fraud to the Card-Not-Present (CNP) space. The cards can, however, be used online, where the chip is not verified and the stolen card number can be used. In this case, the merchant is on the hook for fraudulent chargebacks, unless they have authenticated the transaction using one of the 3-D Secure protocols, known by the brand names MasterCard Identity Check, Verified by Visa, SafeKey etc.
These chip cards are going to take time to be adopted. At this point in the rollout, most cards have both the magnetic stripe and chip while the chip-embedded cards and readers get issued to consumers and installed at retailers, respectively.
For merchants who have both POS and CNP presence, upgrading to the EMV terminals is not the end of the story. They need to protect their CNP transactions, where fraud is expected to escalate in the U.S. as fraud at POS gets shut down.
In conclusion, EMV’s rollout in the U.S. will be a good thing for brick-and-mortar merchants, but will open up opportunity for fraud for CNP merchants. If your business includes a CNP component, you will want to make sure you are ready by having a Consumer Authentication strategy in place. Not only will you benefit from increased sales, fraud protection, liability shift and potentially lower interchange fees, you will also have the assurance that fraudsters will not impact your bottom line. With Your One Connection to Cardinal we can FutureProof ™ your Business. Learn more!