On October 1, the major credit card brands shifted to a new security standard, otherwise known as the EMV shift. Transitioning to EMV requires merchants to make a significant investment in new technology, such as the implementation of a new terminal which can read the traditional magnetic stripe, but also, the new “chip and PIN” cards which are the new standard with debit and credit cards.
Now, if you’re thinking that because you’re an online merchant with no physical storefront that this doesn’t affect you, think again. Due to the new security technology, counterfeit card fraud will shift to the path of least resistance, which will be card-not-present (CNP) transactions, such as mobile and desktop purchases.
Fraud Doesn’t Go Away, It Just Shifts Venues
In every country that has migrated to the chip-embedded EMV cards, fraud hasn’t really gone away, it has just shifted to the online channel, which has historically held weaker authentication protocols. Data from the UK, France, and Australia all show CNP fraud accounting for a greater portion of overall fraud after each country’s respective migration to the new security protocols. In 2005, when the UK shifted to EMV, there was a 40% increase in CNP fraud over 10 years. In France and Australia, who both adopted the EMV standard in 2007/8, there was a 20% increase over the next three years.
To help protect against this upcoming increase in CNP fraud, the best defense is a good offense. No single security mechanism will be a silver bullet to protect against fraud. We recommend taking a multi-faceted approach using a variety of security tools that work well together. Stay informed of best practices for your online store and your merchant account. Right now there are over a dozen of security options available for online transactions. A very helpful resource dealing with the EMV migration and what online stores can do to protect against fraud can be found here.