In a recent post we discussed EMV technology in our article "Why the World Will NOT End When Chargeback Liability Shifts." The EMV Chargeback Liability Shift in October is a hot topic for credit unions, banks, retailers, and consumers, with a lot of talk about the impact it will have on card security. When it comes to face-to-face (Card Present) transactions, there is great hope that using chip-enabled cards will reduce a significant portion of credit card fraud. But one topic getting little to no attention among the hype is what impact EMV will have on Card Not Present transactions.
Even though EMV's actual impact from a technology and liability standpoint only deals in the Card Present space, research has shown, and experts are predicting, that its adoption will only make our card security problem in the US worse. According to a report from Payment Source, many believe the United States' transition to EMV may be too little too late:
EMV will help reduce fraud at point of sale, but that matters less and less as shoppers continue to migrate to online platforms, especially mobile ones. For example, just 29% of shopping events are "in-person only" today, according to the Marketing Research Association.
Where shoppers go, fraudsters follow. Card-not-present (CNP) fraud—typically from purchases made online or via a mobile device—was about $10 billion in 2014, according to Javelin Research and Strategy. Point-of-sale (POS) fraud, by comparison, was $6 billion in 2014.
The transition to EMV will only make the CNP fraud problem worse, as fraudsters look for new, less-secure avenues to exploit. While Javelin projections predict that POS fraud will decrease between now and 2018, CNP fraud is expected to increase by more than 100 percent. We’ve seen this effect before: in the United Kingdom, CNP fraud rose 79% in the first three years after EMV adoption.
Credit Unions' opportunity to make an impact on card security
The EMV rollout is another great moment for credit unions to differentiate themselves from the big banks. While banking giants are rolling out their chip enabled cards, consumers receiving them are confused. While EMV may be on the mind of every financial institution employee and merchant, many consumers have no idea what EMV means, does, or how it helps them.
Member education is key, and your close relationship with your member base should be used to your advantage. Help ease the transition to EMV by providing members with information they need — and excluding the information they don’t. Refer to our article "Avoid These Common Mistakes When it Comes to EMV and Your Members" for some useful tips on member education.
Understanding that the majority of your member's transactions are no longer face-to-face, and that CNP transaction fraud is expected to spike, it's time to look at tools you can provide to enhance all forms of card security. For example, allowing members to control the status of their debit and/or credit card through your mobile app with remote controls for cards is one such way to enhance your credit card management, and ease some of the concerns over new threats.
