EMV Alone Won’t Cure Holiday Fraud Blues

How successful will the U.S. migration prove to have been? After the coming holidays, we’ll have a better gauge on how successful the U.S. migration to EMV has been.

If there is a noticeable shift from in-store to online card fraud, it will indicate that card issuers and larger retailers have made positive headway in the effort to reduce successful use of counterfeit cards. Ultimately, I suspect the results will be muddled and inconclusive.


Most of us likely still have at least one non-EMV credit or debit card in our wallets, as somEMV-Questione issuers are lagging behind on issuing chip cards. At merchants that are accepting EMV this holiday season–we’re going to have to suffer checkout times that are even longer than those typically associated with this time of year, as consumers and store clerks struggle with whether to swipe or “dip” cards. Some will complain. Newspapers will continue to publish stories of consumer frustration and confusion. And criminals will continue to seek out the easiest path to ill-gotten gains.


In addition to longer checkout times, consumers and merchants are going to find out that EMV is not the magic elixir to prevent all card-related theft. EMV is a card authentication technology, not a data protection technology. Chip cards do not protect against theft of the primary account number (PAN) or expiration date. Undoubtedly, there will still be cyber breaches impacting retailers that haven’t taken additional steps to protect consumer card data, and theft of chip transaction details can result in cross-channel fraud in card-not-present (CNP) environments, such as online or over the phone.

Consequently, similar to every other country that has adopted EMV, we will likely see more fraud shift to the online environment as the crooks seek out the easiest way to achieve their goals. This is important considering U.S. consumers’ online purchases totaled nearly $84 billion in the 2nd quarter of 2015 alone. While there are ways to apply EMV to online purchases, they are not widely adopted in the U.S. where utilization of PINs for credit card purchases is for the most part spurned.


Nonetheless, I have been pleasantly surprised to see EMV acceptance popping up in small businesses, ranging from dry cleaners to medical offices.

And, while not ALL retailers will be accepting EMV this holiday season, it’s important to note that the massive technological migration that took place in preparation for the liability shift did not happen in vain.  Many used the liability shift as an opportunity to upgrade their technology with solutions that not only have the ability to accept EMV, but also provide more flexibility and value to consumers at the point of sale.  Many of the new technologies retailers put in place—or are currently rolling out—also have the ability to support NFC, mobile wallets, consumer loyalty programs, beacons and other capabilities that can be used to reinvent the payment experience

Finally, I believe this holiday season will lead to greater recognition that in-store and online transactions require a security architecture incorporating multiple layers beyond EMV. These include:

  • Encryption from the point of entry to the payment card processor, shielding against malware that “sniffs and captures” sensitive data.
  • Tokenization to replace cardholder data (including the PAN) with surrogate values (tokens). Even if the token numbers are stolen, they are meaningless to thieves because outside of the correlation database, they are simply collections of random numbers.

With this in mind, merchants will hopefully be more inclined to leverage managed or cloud-based services that incorporate these additional layers and redirect payment terminal data directly to the processor, ensuring that it is not routed or stored in integrated POS software systems. Efficiencies gained through these types of services can essentially “free” retailers to shift more of their resources away from “payments” and towards selling more and better serving their customers.

As these tools become more widely adopted, we can look forward to increasingly happier holiday seasons for merchants and consumers

This post originally appeared in the December 2015 PYMNTS.com Company Spotlight.


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