RANCHO CUCAMONGA, Calif.—Credit unions that waited to convert their card base to EMV until after October 2015, choosing to reissue as cards expire, appear not to be suffering greater fraud losses, according to one report.
Michelle Thornton, director of product development at CO-OP Financial Services, said the CUSO is not seeing a big difference in fraud impact among CUs that hurried to convert the card base post liability shift deadline and those that moved slowly.
“We have not seen any definitive increase in fraud for those credit unions that are not fully converted to EMV. The biggest reason, we feel, is that there are still not that may chip-on-chip transactions—chip terminal and chip card,” said Thornton, who noted that only about 30% to 35% of merchants have EMV enabled terminals today.
Thornton’s comments are part of a series of interviews by CUToday.info marking the one-year anniversary of the EMV liability shift.
Chargeback Opportunities
Thornton acknowledged, however, that credit unions that moved swiftly post October 2015 have been taking advantage chargeback opportunities.
“We are seeing some of this,” she said. “We have heard from credit unions that have reissued all of their cards that chargeback opportunities are there,” said Thornton.
Michelle Thornton, CO-OP FS
Another reason CUs that have not moved aggressively with EMV are not yet suffering at the hands of fraudsters is because just about all of the big banks have converted their entire card bases to EMV, explained Thornton.
“That means the smaller financial institution mag stripe cards are left for criminals to target. But the crooks aren’t necessarily trying to find these opportunities,” said Thornton. “Fraudsters will go where they get biggest bang for their buck, and that is after the bigger guys. That’s what they do. It’s their business.”
Thornton said that post October 2015, crooks have changed their tactics.
“They are focusing a lot more on account takeover, anticipating all plastic and all terminals being chip someday. So fraud is increasing, just in different ways,” she said.
Many Ways To Get At The Money
If crooks can take over an account, they can find numerous ways to get at the money, said Thornton.
“They can use ATMs, they can turn to P2P, all of which we are seeing,” she said. “They are looking for other avenues now outside of cards.”
Yet fraudsters still have a lot of time left to attack mag-stripe plastic, with chip-on-chip transactions standing at only 10% of all card transactions, said Thornton, who added that she is not surprised at that statistic.
“Last year, prior to the liability shift deadline, I thought that the impact of EMV on fraud right now would be small. Issuers are well ahead of merchants with EMV,” said Thornton. “What has slowed merchants down are lengthy delays in getting their terminals certified. I don’t think they saw that issue coming.”
What’s ahead for EMV? According to Thornton, a long-term transition.
“I know there are some people who thought that the U.S. might be transitioned to EMV in a year, which I knew was unrealistic,” said Thornton. “At CO-OP we expect this will be a ten-year migration in the U.S., to be fully completed. This migration will move slowly. But I think that by this time next year most issuers will have converted their card base to EMV, and I hope a lot more merchant terminals will be EMV enabled. Then the question is how long before we completely get rid of the mag stripe. That is next.”
Additional Stories In The EMV Series