As the United States undergoes a transition from magnetic strip credit cards to EMV chipped cards, online retailers and credit card companies are gearing up for a spike in e-commerce fraud. EMV is a standard that has been in effect in most of Europe for years. In EMV, a small micro-chip is placed on the face of the credit or debit card that creates a unique code for every transaction made. Aité estimates that about 70 percent of U.S. cards will be chipped by the end of 2015, 91 percent the next year, and 98 percent by 2017. But as card not present (CNP) technologies take hold on the U.S., fraudsters are expected to raise their game.
As point-of-sale fraud becomes more difficult to execute, CNP fraud in e-commerce will be on the rise. This means that merchants who accept CNP must prepare their CNP channels for this new threat. If they don’t it could cost merchants big time. It is estimated that every dollar in fraudulent transactions will cost a merchant approximately $3.08. Based on an analysis of EMV adoption, Aité Group predicts that CNP fraud will double to $6.4 billion by 2018. Canada’s migration to EMV between 2008 and 2013 can serve as a case study for what the United States could experience. Although counterfeit and lost/stolen fraud decreased by 54 percent, CNP fraud jumped 133 percent at the same time.
As fraud prevention technology becomes sophisticated, so do the tools of fraudsters. The challenge for merchants is the balancing act between fraud reduction and purchase convenience. While merchants must create effective fraud fighting tools, if it takes too much effort to complete a transaction, customers might get frustrated by the hassle and quit. Whatever actions merchants take they must act quickly as consumers accelerate online purchases.
Merchants accepting CNP must have comprehensive merchant chargeback protection. Protect your livelihood and the sensitive financial information of clients with the assistance of EMB. EMB gives all types of merchants a full suite of fraud prevention tools. The Chargeback Shield will defend your merchant account while you concentrate on raising profits. Chargeback Shield takes the risk out of high risk business.