The Impact of EMV (Chip and Pin) on Fraud

  • Identity Fraud, Identity Verification

Card inserted into EMV reader
As with most new technologies, the shift to EMV specifications (Europay, Mastercard and Visa – also referred to as “Chip and Pin”) in the U.S. has brought with it unrealistic expectations.  EMV implementation has undoubtedly had a significant impact in the security of card-present transaction, with implementation in the UK (which was adopted years earlier than in the U.S.) resulting in a decrease in card-present fraud of 80% from 2007 to 2014, with card-present fraud actually increasing in the U.S. during the same time period.

 

While this trend shows that EMV is an improvement over the magnetic strip processing, it is far from a panacea for credit card fraud.  In both the UK and Australia, card-not-present fraud has increased as fraudsters shift their focus toward easier targets.  While personal EMV card readers make it possible for consumers to better protect themselves in online transactions, the vast majority of consumers will not have these devices (or even be aware of their existence) and EMV does not provide any additional protections for phone or mail based transactions. 

The shift in focus for fraudsters also means increases in other forms of fraud, including identity fraud through both identity theft and synthetic ID fraud.    Businesses that already deal with these forms of fraud need to be aware of these trends and initiate (or expand) measures to mitigate the increasing risk.  Verifying consumer data that is not contained within the magnetic stripe of credit cards (including residential address, date of birth, and/or social security number) is a simple way to decrease the likelihood of fraudulent activity from stolen payment card data for card-not-present transactions. 

Electronic Verification Systems (EVS) can help businesses in card-not-present environments to address these challenges.  With simple and affordable solutions for identity verification, EVS works with businesses of all sizes to prevent fraudulent activity.