EMV is the new credit card technology finally coming to the U.S. after many years of use in Europe – with its official transition taking place on October 1.
The EMV standards will change card security. But what may have more impact on the bottom line is churn.
Why? When issuers send out new EMV cards, the expiration date and security code often change on the reissued cards. This means that cards used online with stored information may be declined.
Fortunately, if your business is based on a subscription model, you’re less likely to experience this type of churn. Since the card information has already been verified, the EMV-driven changes to expiration date and security code should be seamless -- as long as the merchant’s subscription billing platform provides auto-update capabilities.
While consumers will need to adapt to some new behaviors when checking out at point-of-sale as retailers roll out new EMV-compliant readers – the good news is that everything should run smoothly for consumers on their recurring and subscription-based orders.
EMV will be helpful in protecting transactions overall. With an embedded microchip and associated security features, these new EMV cards are more resistant to fraud, in particular at Point of Sale (POS). Unfortunately, this means that nefarious types may shift their efforts to Card Not Present (CNP) fraud—as has happened in the past wherever EMV cards have been launched.
We can expect fraudsters to increase activity in the cloud, a factor that both merchants and consumers need to take into account. E-commerce and omnichannel merchants should heighten security measures and consumers should be extra-vigilant about reviewing their bills for fraudulent transactions.
Dan Burkhart is Co-Founder and CEO of Recurly.