Post-EMV, what’s the next step for banks to fight fraud?

One year on from the launch of EMV chip technology for payment cards in the US, the signs are positive as far as tackling fraud is concerned. Mastercard – the ‘M’ in ‘EMV’ – released figures showing a significant fall in the cost of counterfeit card fraud for US retailers who have adopted EMV.

The credit card provider said the ultimate goal is “moving fraud out of the system” – an ambition that will require constant innovation and awareness of the latest threats facing customers, merchants and financial institutions (FIs).

Combating counterfeit fraud

The Mastercard figures showed that US retailers that had completed their EMV adoption or were close to doing so experienced a 54 per cent decrease in counterfeit fraud costs, when comparing April 2016 to the same month a year earlier. In contrast, large merchants that hadn’t migrated to chip technology or had only just started the process suffered a 77 per cent year-on-year increase in costs from counterfeit card fraud.

Chips in EMV cards link up with the chips in payment terminals when a transaction is taking place, creating a unique code for every purchase that protects the card from being counterfeited.

Brian Riley, director of the Credit Advisory Service at payment consultants Mercator Advisory Group, said: “Payment cards are an essential part of commerce; EMV requires a change to the customer experience as the industry shifts from swipe to chip. There is no doubt chip cards will curtail fraud and it is exciting to see enhancements at the point of sale that will propagate usage, reduce friction and accelerate transaction time.”

Mastercard’s North America president Craig Vosburg said having chip cards in wallets and chip terminals at checkouts is a crucial part of the battle to drive card fraud out of the US. He added: “We’re encouraged by the significant progress over the last 11 months. With every additional chip transaction we move closer and closer to our collective goal – moving fraud out of the system.”

What else can banks do?

Despite the obvious benefits of EMV technology, it’s important to note that there is no such thing as a universal defense against a threat as complex and multifaceted as financial fraud. Systems for managing financial affairs and completing transactions are constantly evolving, but so are the methods used by criminals to target any weaknesses in these new technologies.

In the UK – where EMV cards were rolled out more than ten years ago – there were more than a million incidents of financial fraud in the first half of 2016, 53 per cent more than in the same period a year earlier. The figures were released by Financial Fraud Action (FFA) to mark the start of a joint campaign with major banks and FIs to combat financial fraud.

One of the most effective ways of protecting your business and your customers from the ongoing threat of financial crime is by adopting a solution with the flexibility to respond to changes in the threat landscape. Dedicated enterprise fraud detection and prevention systems can strengthen your defenses against various dangers, including traditional counterfeit and card-not-present frauds, online or person-to-person payment fraud, and identity fraud using synthetic IDs.

In today’s increasingly diverse, omnichannel financial services industry, it’s crucial to find an enterprise fraud solution that combines the best possible protection against the latest risks with a seamless and reliable experience for your customers.

Written by Jan Rees

Jan Rees

Jan Rees is a Solution Sales Specialist for NCR’s Fractals and Authentic solutions. Jan has 27 years of diverse experience within the cards and payments industry, including technical systems implementation and project management, and managed services operations.

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