FOSTER CITY, Calif.—Chip cards are already deterring fraudsters at the point of sale, with Visa reporting that some of the biggest merchants are seeing a dip of more than 18% in counterfeit transactions.
But chip cards are also placing a bulls-eye on merchants that are still relying on mag stripe.
Among the 25 merchants that were suffering the most instances of counterfeit fraud at the end of 2014, five that began processing credit and debit cards equipped with EMV terminals saw those infractions fall 18.3% as of the final quarter of 2015, Stephanie Ericksen, vice president of risk products at Visa, told USA Today. Meanwhile, five of those merchants not yet equipped to handle chip-enabled cards saw an increase in fraudulent transactions of 11.4%.
“We’re seeing EMV is having a positive impact on counterfeit fraud,’’ Ericksen told USA Today. “Merchants who implement chip, their counterfeit fraud is going down, while those still finalizing plans, their counterfeit fraud is going up.’’
After a slow start, both Visa and MasterCard said that the rollout of chip-enabled cards, as well as terminals that can accept them is moving along at a strong pace. USA Today reported that Visa says that it has issued roughly 265 million chip-enabled credit and debit cards so far, making the U.S. the world’s biggest EMV market. And over one million, or about 20%, of merchant locations were processing chip cards.
MasterCard meanwhile said that as of last month, 70% of its consumer credit cards were chip equipped, a 50% bump since October of last year.
But analysts have stated that where the U.S. is today with EMV, is behind expectations from last year.
According to analysts, the reasons include forecasts that were far too ambitious for a payments infrastructure that is the most complex in the world, and insufficient research being conducted to accurately gauge merchant readiness.
But all of that said, those same analysts believe progress has generally been good. Consensus is that early expectations for merchant readiness were clearly unrealistic, but forecasts on issuer progress were spot on.
As many experts have predicted, criminals are moving to online, card-not-present fraud (CNP)—and some say it could be a bigger move than what was experienced in Canada when that country migrated to EMV.
The reason, crooks have more sophisticated tools today.
“In the past, most of the tools hackers used were extremely crude,” Schober stated in ThirdCertainty. “But advances in technology are making it much easier to compromise people online.”
Canada, for example, saw a 54% decline in counterfeit cards and 133% jump in CNP fraud between 2008 and 2013, according to Aite Group research.
Aite estimates that CNP fraud in the United States will grow from $2.9 billion to $6.4 billion, as hackers shift their tactics.