When a country migrates to EMV chip cards to improve its security, the fraudsters will move to another channel, but not necessarily another nation.
Fraud affecting EMV cards issued or acquired in the Single Euro Payments Area in Europe jumped 8% in 2013, about the time the SEPA zone had near-complete adoption of EMV at the point of sale, the European Central Bank stated in a report this week.
The fraud resulted in $1.44 billion (1.32 billion euros) lost, mostly from card-not-present transactions, marking the highest level in five years, the ECB stated.
Card-not-present fraud was the only type to record an increase from the previous year, a rise of 20.6% compared to ATM and point of sale fraud, which both fell by 13.7% and 7.9%, respectively.
EMV technology protects against counterfeiting, but is effective only in channels where the physical card is required. E-commerce sites, for example, get no clear benefit from EMV.
The ECB warns that card-not-present fraud could continue to rise unless necessary mitigation measures are adopted, such as the guidelines issued by the European Banking Authority and the Eurosystem for secure Internet payments and card payment oversight.
Fraud is still below 2008-2009 levels in Europe, or about when EMV first started taking hold, the ECB stated.
Most companies in the U.S. face a liability shift beginning Oct. 1 if they are not equipped to handle EMV chip cards.