The belated introduction of EMV technology to the US payment industry is currently having a major impact on how merchants, payment providers and other stakeholders in the financial industry approach fraud.
Last year, the EMV liability shift for payment terminals saw merchants become responsible for card present fraud conducted on their premises, and this is giving retailers the push they need to adopt tougher security protections.
But what about the impact of EMV in other areas, such as the ATM. The focus of many financial institutions will be turning in this direction soon, as key deadlines are fast approaching. For instance, it is now just a few months until MasterCard’s EMV liability shift comes into effect in October. Meanwhile, the shift for Visa payment cards is set for precisely a year later.
The impact of the shift
Explaining the need for the liability shift when the plans were announced back in 2012, group executive for US markets at MasterCard Mike Weitzman observed that in other markets where EMV is already established, there has been a clear pattern of fraudsters shifting their attentions to the least secure channel.
“By establishing this liability shift, we’re advancing efforts to prevent and reduce fraud,” he stated. “This continues our commitment to look holistically at the next generation of U.S. payments.”
Once this is in place, it will mean ATM operators and acquirers will shoulder the financial burden of any fraud found to have taken place via the devices.
It was noted by ATM Marketplace that “nothing short of an act of Congress” will stop this, although the publication suggested this may not be out of the question, as Illinois senator Dick Durbin – who was responsible for adding several key payments card-related amendments to the Dodd-Frank Act – has been examining EMV recently.
The effect on skimming rate
However, one thing many experts agree on is that, as ATM security gets toughened up ahead of the liability shift, fraudsters will seek to capitalize while they can. This is likely to mean a rise in the amount of ATM fraud before ATMs are updated.
In the long-term, the introduction of EMV is expected to lead to a significant drop in skimming rates. But this will only occur once acceptance of EMV is widespread enough to make removing the magnetic stripe from cards a feasible option, something that is unlikely to take place for a number of years.
Until this happens, the only foolproof way to prevent skimming at the ATM will be to prevent this stripe – the weakest part of the card when it comes to security – making contact with the reader.
The good news on this front is that there are now several options for this, with mobile and contactless solutions increasingly being deployed in ATMs. Indeed, contactless technology used in connection with the EMV transaction has been offered by vendors such as NCR for some time now, but with liability for fraud set to shift to operators, there’s now a real incentive for these organisations to ensure technology to bypass the magnetic stripe is in place.