With the EMV migration continuing, it is critical that organizations keep in mind that EMV is not the security “silver bullet” that businesses might hope for. Rather, it is only one piece of a layered approach to fraud prevention that businesses should incorporate.
Retailers still need to take the necessary steps to safeguard data in several different ways through a balanced and consistent strategy that relies on a proven, best-in-class fraud detection solution and industry expertise to prevent fraud without preventing sales.
EMV was designed to better authenticate credit transactions. Rather than handing over their card to a cashier or swiping their card’s magnetic strip, consumers are now prompted to insert their card into an EMV terminal and enter a pin number. This new system adds several layers of protection, including encrypted data on the card itself, which makes it tough for fraudsters to duplicate.
Here are 3 things that businesses can expect with the new EMV change.
EMV adds hurdles for consumers and merchants – at least initially.Even in business, we are all consumers first and we’re all starting to feel the impact of the EMV conversion.
Once we begin using our new cards, we will immediately notice that our shopping experience is different. We’ll no longer have to hand our card to a cashier. Instead, we’ll dip our card into an EMV terminal.
This is part of the appeal of the new system, as it adds several extra layers of protection, including encrypted data on the card itself, which makes it tough for fraudsters to duplicate. However, while the new system is more secure, given that the entire country is in the process of adopting the new credit card system there will likely be headaches and hiccups.
EMV requires significant business investment. For businesses, especially retailers, chip-and-signature required significant investment, especially on hardware.
It has been reported that many small businesses are still not ready for EMV credit cards. Businesses need to keep in mind that consumer convenience should remain an important consideration – and that should be balanced with security and privacy concerns. That means deploying fraud prevention tools that don’t also equal sales prevention.
Fraud will move online. With the EMV rollout point-of-sale fraud will be much more difficult for fraudsters to perpetrate.
While point-of-sale transactions become safer and more secure, card not present (CNP) fraud will rise in the wake of the EMV rollout as criminals focus their energies on the fraud they can still perpetrate. Thus new challenges in preventing CNP fraud are expected to emerge. In Europe credit card fraud has been slashed by over 65% post-EMV and many attribute this to the adoption of chip-and-pin technology. However, those same markets within EMV already in place saw their CNP fraud rates increase as a result of the switch. Fraud is always moving.
Steve Platt is executive vice president of fraud and identity at Experian.