EMV’S Impact On Card-Not-Present Commerce

The US decided to switch to EMV chip cards in October 2015. In 2016, e-commerce fraud rates grew by 33%, according to Experian, a global information services group

After the EMV Liability Shift

In 2016, the Strawhecker Group, a management consulting company focused on the payments industry, found that 29% of card-present merchants were already using an EMV-compliant terminal and the necessary software to process chip-card transactions.

Since October 2015, there has been a rise in CNP fraud attempts. David Britton, vice president of Industry Solutions at Experian, notes with fraud attempts increasing, the percentage of sales being compromised is also growing. This can negatively affect your internal fraud processes and your good customers, Britton adds.

The increase in fraud attempts isn’t the only problem in this regard; many fraudsters are applying new tactics based on the information available on the dark web. Breaches in 2014 were mainly associated with comprising credit cards in physical locations. In 2015, many breaches occurred in industries rich with personal consumer and/or account information available online.

Britton suggests merchants should replace or implement a new “first filter” or system designed to do the difficult thing in identifying fraud. If this doesn’t help, layering an additional tool that identifies fraud through device identification, machine learning capabilities or through implementing 3DSecure/Consumer Authentication can be another way out.

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New Fraud Methods

According to many experts in the field, as the number of merchants being able to process chip-enabled cards is growing and as issuers move to convert 100% of all Visa and Mastercard cards, almost all fraud that has been occurring in physical locations will move online.

Fraudsters are now focused on the digital channels where they could reach more success. With more attackers entering a rapidly growing mobile and online commerce space, it has become more difficult for merchants to detect them.

This will lead to increased e-commerce fraud. To deal with it, you should use a multi-layered approach that puts together transnational data elements and details about the user and their device.

What Is Expected

2016 was a record year for data breaches. There were 1.093 breaches, which is up 40% from 2015, according to the Identity Theft Resource Center, a US non-profit organization that provides victim assistance and consumer education through its toll-free call center, website and social media.

The Federal Trade Commission recently revealed that the number of consumers who reported that their stolen data was used for credit card fraud was increased ─ from 16% in 2015 to over 32% in 2016.

According to Experian, the record number of data breaches means fraudulent activities are expected to happen in the future as well. You should evaluate your current processes and the systems your business deploys for preventing fraud, optimizing declined transactions, and protecting your customer’s data.

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